USD/JPY firm above 105.50 ahead of US data

After an initial downward reaction to the BOE's decision to stand pat, the USD/JPY pair held on to its strong gains and is now trading back above 105.50 level.

The pair maintained its strong bid tone despite of a fresh wave of selling pressure dragging the US Dollar tumbling lower across the board. The greenback came under intense selling pressure after the Bank of England, defying all expectations, left its benchmark rate unchanged at 0.5% and also kept the asset purchase facility steady at £375 billion.

The pair, however, remained firm above 105.00 on increasing hopes of additional fiscal stimulus from Japanese government.

Next in focus would be US weekly jobless claims and PPI data for immediate momentum. However, near-term direction would continue to be driven by news flow surrounding the Japanese stimulus package, which now seems to limit immediate sharp slide for the pair.

Technical levels to watch

On the immediate downside 105.00 remains immediate support to watch for, which if broken is followed by support near 104.50-40 area. Only a decisive weakness below 104.50-40 support might negate near-term bullish expectations and force the pair to break below 104.00 handle, towards testing 103.50-40 support.

Meanwhile on the upside, strong buying interest above 106.00 handle now seems to open room for extension of the pair's near-term upward trajectory towards its next major resistance near 107.50 region.