USD/JPY remains capped below 107.00 handle post-Kuroda

   •  USD preserves overnight strong gains and supportive of the up-move.
   •  JPY further weighed down by global risk-on mood and BOJ status-quo.
   •  The US monthly jobs report might provide a fresh directional impetus.

The USD/JPY pair caught some strong bids and jumped to over 1-week tops during the Asian session on Friday, albeit struggled to move back above the 107.00 handle.

The pair built on this week's rebound from mid-105.00s, closer to 16-month lows touched last week and gained some strong traction following the latest BOJ monetary policy update. The central bank kept its key benchmark interest rates unchanged and yield curve control target at zero percent. 

This coupled with a recovery in investors' risk appetite, led by the N. Korean announcement to suspend the nuclear missile program, further weighed on the Japanese Yen's safe-haven appeal and provide an additional boost to the major. 

Further upside, however, remained capped on the back of some hawkish comments by the BoJ Governor Kuroda, who at the post-meeting press conference stuck to an upbeat view on the domestic economy. 

Meanwhile, Kuroda's comments that the Japanese central bank will patiently continue with its current aggressive stimulus until the 2% price target is achieved, remained supportive of the pair's strong bid tone. 

It would now be interesting to see if bulls are able to maintain their dominant position or the pair once again runs through some fresh offers at higher levels as traders now look forward to the keenly watched US non-farm payrolls data for some fresh directional impetus. 

Technical outlook

“A close above the descending trendline would allow a stronger rally to 108.78 - 38.2 percent Fib of the sell-off from 114.74 to 105.25. A violation there would expose resistance at 109.59 (weekly 100-MA) and 110.00 (psychological level). That said, in the short-run, the spot will likely have a tough time holding on to gains above 109.00, given the primary trend is bearish”, writes Omkar Godbole, Analyst and Editor at FXStreet.

He further added, “a horribly weak US wage growth numbers would open doors for a re-test of the recent lows around 105.25. Note that a close below 105.00 would allow bears to erase the remaining part of Trump rally (101.19-118.66)”.