Extending its recovery move from 6-week lows, the EUR/JPY cross maintained its bid tone for the second consecutive session but had a muted reaction to the ECB decision.
Currently trading around 122.25-30 region, the cross held on its gains after ECB decided to leave its main interest rate unchanged at 0.0%, deposite rate at -0.4% and QE purchases at €80bn per month until end-March 2017, stepping down to €60bn from April 2017.
Meanwhile, a cautious sentiment prevalent around European equity markets provided little boost to the Japanese Yen’s safe-haven demand, albeit has managed to restrict the pair’s up-move at-least for the time being.
With no new action on the policy front, investors now turn their attention to the Q&A session at the subsequent ECB press conference, where a slight shift to less dovish / hawkish stance would lift the shared currency across the board and provide fresh bullish impetus for the pair’s ongoing recovery trend.
Technical levels to watch
A follow through buying interest above 122.40 level, the cross is likely to accelerate the up-move towards 123.00 round figure mark ahead of 123.25 resistance area. On the flip side, 121.65 level is likely to protect immediate downside, which if broken seems to drag the cross back towards 121.00 round figure mark ahead of multi-week lows support near 120.55 region.
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