USD/JPY back above 106.00 handle, surges to session high

A fresh wave of US Dollar buying interest seems to have emerged, lifting the USD/JPY pair back above 106.00 handle to currently trade at session high.

The greenback maintained its strong bid tone on rising expectations of a Fed rate-hike later during this year, with CME groups Fed Fund future pointing to a 40% probability of such an action in December. 

Meanwhile, the Japanese currency continues to witness selling pressure across the board on anticipated fresh stimulus package announcement by the Japanese government in order to revive economic growth and eliminate deflationary pressure. 

Moreover, as European equity markets recover from early losses the pair seems to have gained further traction on improving investor risk sentiment. With an empty US economic docket, the pair would continue to take cues from the prevalent risk sentiment surrounding equity markets.

Technical levels to watch

From current levels, 106.53 (July 19 high) seems to provide immediate resistance and is followed by resistance around 106.90-107.00 region. A convincing strength above 107.00 handle would open room for continuation of the pair's bullish momentum.

On the flip side, 105.50-40 region (Thursday's low area) has now emerged as immediate support, which if broken is likely to drag the pair towards 104.63 support (July 15 low).