FXStreet (Mumbai) - A fresh bout of buying interest is currently seen around the US dollar, now pushing USD/JPY towards 121 barrier, as Tokyo opens with risk-on back in full swing while markets digest the dovish ECB news. USD/JPY testing h1 R1 Currently, the USD/JPY pair trades 0.19 higher at 120.93, extending the gains from 120.65 levels. ECB pointing towards probable QE extension/expansion in Dec yesterday boosted the demand for riskier assets, and thereby diminishing the safe-haven bids for the yen. Nikkei opened on a stronger footing, now rallying over 2% to 18,850 points. Moreover, a break of 120 barrier in the last US session on the back of dovish ECB saw option traders resorting to hedging their short calls/puts by buying the spot, spurring the ongoing rise in USD/JPY. Meanwhile, the USD/JPY pair will remain underpinned in the day ahead, tracking the upbeat sentiment on the equities amid a data-dry macro calendar for the major. Focus now shifts towards next week’s FOMC and BOJ decisions. USD/JPY Technical levels to consider The pair is testing 121 as Tokyo opens and now heads towards next resistance located at 121.36/42 (daily R1 + 200-DMA). Above the last, the pair could climb further towards 121.73 (100-DMA). While to the downside immediate support might be located at 120.70/65 (h1 10-SMA + Today’s Low), below which 120.49/23 (daily pivot + 5-DMA) would be tested. For more information, read our latest forex news.