EUR/JPY plunges to 113.00 handle

Haresh Menghani FXStreet

The shared currency extended post-ECB sell-off, taking the EUR/JPY cross to a fresh three week low.

Currently trading around 113.00 handle, the cross extended its rejection move from 50-day SMA touched on Thursday and traded with bearish bias for sixth session in the previous seven. Uncertainty surrounding ECB's stance over its bond purchase program, following Thursday's comments from ECB President Mario Draghi, has been the key factor driving the cross lower on Friday.

Meanwhile, safe-haven buying interest around the Japanese Yen, after a powerful earthquake with a preliminary magnitude of 6.6 was reported to have shaken western Japan, aggravated the selling pressure and dragged the cross to monthly lows.

In absence of any major market-moving releases on Friday, the pair's movement on Friday would remain dependent on the broader sentiment surrounding the shared currency and safe-haven demand of the Japanese Yen.

Technical levels to watch

A follow through weakness below 112.90 support is likely to get extended towards September monthly lows support near 112.00 handle with 112.50 level providing some intermediate support.

On the flip side, any recovery attempt might now confront immediate resistance near 113.50 area above which a bout of short-covering might lift the cross towards 50-day SMA resistance near 114.00 round figure mark. This 114.00 handle now seems to cap any near-term recovery and only a decisive move above this strong resistance would negate any near-term bearish bias.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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