The EUR/JPY cross reversed majority of its tepid recovery gains to 124.65 region and is now headed back to the lower end of daily trading range.
Currently trading around 124.30 region, spot ran through some fresh offers after the ECB President Mario Draghi, during his scheduled testimony about the economy and monetary developments before the Economic and Monetary Affairs Committee, said that headline inflation has been subdued and domestic wages were insufficient to support the HICP towards our medium-term objective.
• Draghi speech: There are some signs of pickup in inflation
Based on the inflation outlook, Draghi reaffirmed that its was still too early to think of any changes to the central bank's monetary policy stance and lack of any hawkish signals seems to have attracted some fresh selling pressure around the shared currency.
• Draghi Speech: Economic upswing is becoming solid
This coupled with a mildly cautious sentiment around European equity markets supported the Japanese Yen's safe-haven appeal and collaborated to the pair's retracement back closer to one-week lows touched on Friday.
Technical levels to watch
Immediate support is pegged near 124.15-10 area, below which the cross is likely to extend the corrective slide towards its next support near 123.65 level before eventually breaking below the 123.00 handle to retest last week's swing lows support near 122.55 region.
On the upside, sustained recovery move beyond mid-124.00s now seems to confront strong resistance near the key 125.00 psychological mark, which if conquered has the potential to lift the cross back towards 125.35 intermediate resistance ahead of multi-month highs strong hurdle near 125.80 region.
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