FXStreet (Mumbai) - A renewed risk-on wave hits markets on increasing speculations surrounding BOJ easing next week, which takes the USD/JPY pair finally above 118 handle. USD/JPY tested 118, what next? The USD/JPY pair trades 0.24% higher at fresh session highs of 118.02, finally managed to surpass the key upside barrier. The Japanese yen was badly hit by renewed chatter over BOJ considering more easing and that could be as soon as next week at its policy review meeting, hence driving USD/JPY to fresh three-day highs. The renewed optimism on the Japanese stocks, with the Nikkei bouncing +5.37%, also collaborated to the upside in the major. While the persisting risk-sentiment also favour the risk currency US dollar, which is higher against its major competitors. The USD index advances 0.26% to 99.40, having almost reached 100 mark in the previous session. Moreover, the USD/JPY pair drove higher also after the yen also reacted negatively to the weak manufacturing index from Japan. The Nikkei-Markit Flash Japan Manufacturing Purchasing Manager's Index (PMI) stayed at 52.6 in December, but fell to a preliminary 52.4. in Jan. Nothing of note for the major in the European session ahead, and therefore, the US macro news will be eagerly awaited. USD/JPY Technical levels to watch In terms of technicals, the immediate resistance is located at 118.28 (Jan 14 & 15 High). A break above the last, the major could test 118.77 (Jan 7 & 8 High). While to the downside, the immediate support is located at 117.49/47 (1h 200-SMA/ daily low) below which 117 (psychological levels) would be tested. For more information, read our latest forex news.