USD/JPY reverses a spike above 106.50 on JP MOF denial

A renewed rally in the USD/JPY pair backed by Japanese stimulus news lost legs just ahead of 106.50 levels, sending the rate almost 100-pips lower, before recovering some ground to now trade around 105.85 region.

USD/JPY: Yen slammed across the board

The dollar-yen pair witnessed wild swings on either side over the last hour, mainly spurred by latest Japanese headlines surrounding stimulus package.

Initially, USD/JPY jumped to highs at 106.54 after new hit the wires that PM Abe will announce stimulus detail today, and the package size would be 27 trillion yen.

However, the major quickly faded the spike after the Japanese Ministry of Finance (MOF) came out on the wires and denied reports that it was considering issuing 50 year bonds as a part of the stimulus.

 The immediate focus now remains on PM Abe’s speech due at a revised time, i.e., at 0420GMT, in which he may provide fresh insights on the stimulus package.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 106.54 (daily high). A break above the last, the major could test 107 (round number). While to the downside, the immediate support is seen at 105.30 (1h 50-SMA) and below that at 104.89 (50-DMA).