USD/JPY struggling for firm direction, up-next US ISM PMI

The USD/JPY pair failed to build on to BoJ-led bullish momentum back above 105.00 handle and has now retraced over 20-pips from session peak.

Currently trading around 104.90 level, the pair was seen struggling for a firm direction and remained capped at 105.00 handle amid broad based greenback retracement. The pair initially benefitted from BoJ's decision to keep monetary policy stance unchanged and central bank's readiness to continue with monetary easing measures to achieve the 2% inflation target. 

The initial bullish reaction, however, turned out to be short-lived as the greenback, as measured by the overall US Dollar Index, came under some selling pressure as traders seemed inclined to trim their bullish USD bets ahead of this week's key event risks from the US - the Fed monetary policy decision and monthly employment details (NFP) on Wednesday and Friday respectively.

Later during NA session, US ISM manufacturing PMI, which is expected to tick higher to 51.7 in October from 51.5 recorded in the previous month and will be looked upon to grab short-term trading opportunities.

Technical levels to watch

Weakness below session low support near 104.67 is likely to drag the pair immediately towards 104.42 (yesterday's low) before sliding further towards 104.15 horizontal support. Meanwhile, on sustained momentum above 105.00 handle, leading to a break through session peak resistance near 105.10 level, the pair seems to aim towards last week's multi-month highs resistance near 105.53 region.