USD/JPY turns negative, drops to session low at 106.75

The USD/JPY pair seems to have lost its upside momentum and erased all of its early gains to 107.50 to currently trade with mild losses around 106.75-80 band. 

The pair earlier shot-up to its highest level since June 7 on Japanese fiscal stimulus news but failed to build on to its early bullish momentum as traders might have been inclined to lock-in some profits after the pair's sharp up-surge in last two weeks. 

Traders turned cautious at higher levels after mixed opening for the European equity indices. Moreover, traders might be positioning themselves for some additional volatility ahead of the ECB monetary policy decision. 

A slew of US economic releases, which includes - Philly Fed manufacturing index, weekly jobless claims and existing home sale data, would also act as drivers for sentiment surrounding the USD/JPY major.

Technical levels to watch

On the immediate downside, 106.50 level seems to act as immediate support. This is followed by a strong support near 106.00 handle, which if broken might trigger a near-term corrective move towards 104.70-65 support.

Meanwhile on the upside, 107.50 level now become immediate resistance to watch for, above which the pair is likely to gain traction that could assist its to surge past 108.00 handle and head towards testing 100-day SMA resistance near 108.35-40 region.