The Japanese Yen seems to benefit from a mild weakness in the US equity markets, with the USD/JPY pair erasing majority of its gains to currently trade just below 106.00 mark.
After losing its upside momentum on Thursday, the pair now seems to digest its recent sharp up-surge and consolidate around 106.00 handle. However, given the expectations of additional fiscal stimulus package announcement by the Japanese government and increasing prospects of Fed rate-hike might continue to limit any immediate downslide for the USD/JPY major.
Hence, the next major focus would turn to any additional news /developments surrounding the Japanese stimulus expectations would looked upon for immediate trigger ahead of next week's key event risks, the outcome of a two-day FOMC meeting on Wednesday and BOJ meeting / quarterly economic outlook report on Friday.
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet, notes, "in the 1 hour chart, technical indicators head higher around their mid-lines, although the price is being limited by its 100 SMA. In the 4 hours chart, technical indicators have turned flat around their mid-lines, maintaining a neutral stance, but the price remains well above its moving average, which indicates a limited downward potential. The main resistance comes at 106.60, with a break beyond it required to confirm a steeper recovery."
"Support levels: 105.80 105.40 105.05
Resistance levels: 106.60 107.10 107.50"
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