USD/JPY struggling for direction, consolidating around 106.00

Despite of a broadly stronger US Dollar, the USD/JPY pair is seen consolidating its recent sharp gains around 106.00 handle. 

On Tuesday, the pair did attempt to build on its strength above 106.00 and jumped to 106.50 region after US housing market data added to the recent slew of strong economic data, which now revived talks of a Fed rate-hike later during the year. The pair, however, lost upside momentum and erased all of its strong data-led gains to finally settle just above 106.00 handle.

On Wednesday, the pair is witnessing a subdued trading action in absence of any market moving economic releases and remained hinged to the mixed sentiment attached to equity markets. Meanwhile, the pair seems unlikely to correct sharply as expectations of fresh fiscal stimulus announcement from the Japanese government might continue to keep Yen selling pressure intact.

Technical levels to watch

From current levels, Tuesday's swing high level near 106.50 level seems to act as immeidate resistance, which if cleared decisively is likely to boost the pair beyond 107.00 handle, towards its next major resistance near 107.50 region. On the flip side, sustained weakness below 105.60-50 immediate support has the potential to drag the pair back below 105.00 handle, towards testing 104.75-70 strong horizontal support.