USD/JPY holds stable above 106.00 level, Friday's BOJ decision/NFP hold the key

   •  Easing trade war fears/goodish USD rebound helps build on overnight rebound.
   •  Cautious mood, ahead of ECB, now seemed to cap additional strong gains. 
   •  Friday’s BOJ decision and US NFP would determine the next leg.

The USD/JPY pair reversed an early European session dip to sub-106.00 level and has now recovered around 25-30 pips from session lows.

Currently trading around the 106.15 region, the pair was seen benefitting from a goodish pickup in the US Dollar demand. Possible tariff exemptions for Canada/Mexico eased trade war fears and helped the greenback to regain some positive traction.

Adding to this, a modest uptick in the US Treasury bond yields provided an additional boost to the buck and further collaborated to the pair's uptick through the mid-European session on Thursday. 

Meanwhile, the prevalent cautious sentiment around European equity markets, ahead of the much anticipated ECB monetary policy decision, underpinned the Japanese Yen's safe-haven appeal and might contribute towards keeping a lid on any further up-move, at least for the time being.

Apart from the ECB announcement, today’s economic docket lacks any major market-moving economic releases and hence, the focus would on Friday’s BOJ decision, which along with the keenly watched US NFP data would help determine the pair’s next leg of directional move. 

Technical levels to watch

Any further up-move is likely to confront immediate resistance near the 106.45-50 region, above which the pair seems all set to aim towards reclaiming the 107.00 handle. On the flip side, 105.90 level now seems to have emerged as an immediate support, which if broken could accelerate the slide back towards 105.35-25 support area en-route the key 105.00 psychological mark.