USD/JPY ticks higher to 105.75 ahead of FOMC announcement

After consolidating around 105.50 region for majority of the European trading session, the USD/JPY pair finally seems to have gained some traction and is currently trading around 105.70-80 region.

Earlier during Asian trading session the pair witnessed yet another volatile session, initially soared to 106.50 level on news that Japanese government was considering the idea to issued a 50-year bond. The pair retraced sharply after the government officials denied the rumors but found buying interest around 105.00 handle after Japan's PM Abe confirmed the size of stimulus package to be in excess of 28 trillion Yen. 

The pair, however, failed to build on to its momentum and remained stuck around 105.50 area as investors now keenly await the FOMC decision later during US trading session. Any immediate reaction might still be limited ahead of Friday's BOJ monetary policy announcement, where market participants are expecting the central bank to announce additional easing measure. 

Diverging monetary policy expectations promises a sharp rise in volatility for the USD/JPY major in days to come. 

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Technical levels to watch

Bulls would be looking for a strong momentum above 106.00 handle, which seems to lift the pair immediately towards session high resistance near 106.50 area. A follow through buying interest above session high would confirm resumption of the pair's near-term upward trajectory towards testing 100-day SMA resistance near 108.00 region. 

On the downside, a decisive break below 105.00 handle now seems to force the pair to break below session lows support near 104.60 level and head towards testing its next major support near 104.00 handle.