USD/JPY trim gains but well bid at 105.60

Fading risk aversion on news that an attempted military coup in Turkey over the weekend has failed is denting the safe-haven appeal of the Japanese currency, with the USD/JPY pair opening firm at the start of a new trading week.

Earlier during Asian trading session, the pair rose back to 106.00 handle amid quiet trading on the back of Japanese bank holiday in observance of Marine Day. The pair, however, trimmed early gains and has now dropped back to currently trade around 105.60 region. 

In absence of any major economic releases on Monday, the pair would continue to be driven by the prevalent market risk sentiment. Meanwhile, any sharp corrective move seems unlikely on expectations of additional fiscal stimulus by the Japanese government that triggered an intense selling pressure around the Japanese Yen, allowing the USD/JPY pair to register its largest weekly gain since February 1999. 

Technical levels to watch

From current levels, 105.30 level closely followed by 105.00 round figure mark now seem to act as immediate support levels. Failure to hold these immediate support levels, and a subsequent break below 104.70 support, is likely to drag the pair back towards 103.80-70 support ahead of its previous important resistance now turned strong support near 103.20-103.00 region.

Conversely, strong bullish momentum above 106.00 handle would pave way for extension of the pair's near-term upward trajectory, initially towards 106.80-85 resistance (late June highs) and eventually towards its next major resistance near 107.50 zone.