USD/JPY dips back below 110.00, near-term bullish bias seems intact

The USD/JPY pair erased its early Asian session gains to 110.19 and dipped back below 110.00 handle to currently trade at 109.95, nearly unchanged from yesterday's close.

The pair initially attempted to build on to its Tuesday's up-move after BOJ governor Kuroda hinted toward need for additional stimulus, if required, to curtail further Yen appreciation and attain its 2% CPI goal. The gains, however, were short-lived as Kuroda, for the first time, commented on some tightening of BoJ's loose monetary policy stance.

The pair was also well supported by risk-on rally witnessed across global equity market. Overnight, the US equity indices soared higher and Asian indices were also trading with handsome gains on Wednesday.

From technical perspective, the pair is attempting to build on to its strength above downward sloping 50-day SMA, suggesting that a follow through buying interest would negate any near-term bearish bias and assist the pair to scale higher.

Technical levels to watch

For an immediate up-move, the pair needs to sustain its strength above 110.00 handle and subsequently break through 3-week highs resistance near 110.55-60 area. Above 110.55-60 resistance, the pair seems all set to extend its near-term upward trajectory beyond 111.00 handle towards 111.20-30 horizontal resistance.

Conversely, weakness back below 50-day SMA immediate support near 109.85-80 region is likely to find immediate support near 109.60-55 area, below which the pair seems to drift back to 109.25-20 horizontal support. A follow through selling pressure seems to drag the pair below 109.00 handle, towards testing its next major support near 108.65-60 zone.