USD/JPY clings to its gains above 106.00 handle

After an initial up-move to 106.70 region, the USD/JPY pair trimmed some of its early gains but has held its neck above 106.00 handle to currently trade around 106.30 region. 

A cautious but buoyant investor sentiment surrounding equity markets has kept the USD/JPY bulls on the front foot. However, additional up-move has been limited ahead of this week's key monetary policy decision from the US Federal Reserve and the Bank of Japan. 

This week's monetary policy announcements would help investors to determine the central bank's policy stance and would eventually determine the pair trajectory in the near-term.

In the meantime, traders would continue to take cues from the prevalent risk sentiment surrounding equity markets in order to grab some immediate momentum. 

Technical levels to watch

Sustained weakness below 106.00 handle, and a subsequent break below 105.75 area, seems to drag the pair back towards last week's swing low support near 105.30 level, below which the pair seems to extend its corrective move towards 104.65 region.

On the flip side, 106.80 remains immediate strong resistance to watch for, which if conquered should lift the pair immediately beyond 107.00 handle, towards 107.90 resistance (June 7 high) before the pair heads towards testing 100-day SMA resistance near 108.15-20 region.