EUR/JPY reverses part of yesterday’s sharp slide

The EUR/JPY cross staged a goodish recovery and has now reversed part of yesterday's losses led by ECB monetary policy decision.

Currently trading around mid-121.00s, testing session peaks, an offered tone around the Japanese Yen is the only factor contributing to the pair's recovery on Friday, following Thursday's sharp reversal of nearly 250-pips from six-month highs touched immediately after ECB announced to taper its bond purchase program to €60 billon per month beginning April 2017. The shared currency, however,  came under intense selling pressure after additional details revealed that the central bank would continue with its bond purchase program until December 2017, which was more than market consensus expecting a 6 months extension. 

As markets digested dovish stance adopted by ECB, the prevalent risk-on sentiment, which tends to dent demand for perceived safe-haven assets, was seen weighing on the Japanese Yen and helped the cross to rebound from sub-121.00 mark. 

Technical levels to watch

On the downside, 121.00-120.90 area now seems to have emerged as immediate support below which the cross is likely to head back towards retesting 120.00 psychological mark en-route its next major support at the very important 200-day SMA near mid-118.00s. On the upside, further recovery now seems to confront resistance near 122.00 handle, which if cleared decisively might negate any near-term bearish bias and lift the cross back towards 123.00 round figure mark.