FxWirePro: USD/JPY extends early gains, yen weakens as BoJ's Kuroda warns about downside risks to Japan's economy

USD/JPY chart - Trading View 

USD/JPY was trading 0.14% higher on the day at 107.82 at around 03:30 GMT.

The major is extending gains in the early Asian session after yen saw some weakness on BoJ Kuroda's dovish comments.

Bank of Japan's Kuroda Kuroda while speaking in parliament warned about downside risks to Japan's economy.

He said "Japan's economy likely to remain in a severe state, prices to remain on a weak note due to pandemic impact, falling oil costs,".

The offered tone around the Japanese Yen strengthened, pushing the pair to session highs at 107.92.

Technical studies also support further gains in the pair. Momentum studies are bullish. RSI is above 50 and Stochs are biased higher.

Price action has held bounced off 21-EMA support with 'Doji' formation. Bulls target 110-EMA at 108.06. Break above will see test of 200-DMA resistance at 108.29.

Volatility is rising as evidenced by widening Bollinger bands. Decisive breakout at 200-DMA will fuel further gains. 

On the flipside, 55-EMA is immediate support at 107.68. Retrace below 21-EMA will negate any upside bias in the pair. 

Major Support Levels: 

• S1: 107.68 (55-EMA)
• S2: 107.38 (21-EMA)
• S3: 107.10 (20-DMA)

Major Resistance Levels: 

• R1: 108.06 (110-EMA)
• R2: 108.29 (200-DMA) 
• R3: 108.85 (50% Fib)

Summary: Break above 110-EMA will build upside momentum for the pair. Good to go long on decisive break above 200-DMA, target 108.85 (50% Fib), 109.52 (61.8% Fib).