USD/JPY hits fresh two-month tops on diverging Fed and BoJ outlook

The USD/JPY pair built on overnight bullish break through the very important 200-day SMA and has now jumped to fresh two-month tops, above mid-112.00s.

The BoJ on Thursday decided to leave the target interest rates and asset purchase program unchanged. Against the backdrop of Wednesday's hawkish Fed outlook, diverging monetary policy stance helped the pair to continue gaining traction through early European session.

The pair's post-FOMC upsurge got an additional boost after the BoJ Governor Haruhiko Kuroda, during the post-meeting press conference, showed readiness to add more stimulus if needed as it is still distant to reach 2% price target. 

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It, however, remains to be seen if the pair is able to extend its upward trajectory amid the prevalent cautious environment around equity markets, which tends to benefit the Japanese Yen's safe-haven appeal. 

Later during the NA session, the second-tier US economic releases - weekly jobless claims and Philly Fed manufacturing index, would now be looked upon for some short-term trading impetus.

Technical levels to watch

Immediate resistance is pegged near 112.80-85 zone, above which the pair is likely to surpass the 113.00 handle and head towards testing its next hurdle near the 113.25 region.

On the downside, any retracement now seems to find some fresh buying interest at 200-day SMA, near the 112.25 region, which if broken could drag the pair below the 112.00 handle towards testing 111.85-80 support area.