EUR/JPY surge pass 122.00 handle to 6-month highs

The EUR/JPY cross extended its recovery momentum and surged over 300-pips from session low, surpassing 122.00 handle to hit a fresh six month peak. 

Currently trading comfortably above 122.00 handle, around 122.15-20 region, the highest level since June 7, the cross is benefitting from renewed risk-on wave, which tends to weigh on the traditional safe-haven appeal of the Japanese Yen. Market seems to have fully digested the Italy's 'NO' vote to Prime Minister Matteo Renzi’s constitutional reforms proposal in a referendum on Sunday and is reflected in a sharp recovery staged by the shared currency. 

From technical perspective, the cross has managed to hold and rebound from previous resistance, now turned support, near the very important 200-day SMA, suggesting further up-move even from current levels. Hence, a convincing move above 122.00 handle might trigger a fresh bout of short-covering and continue boosting the cross in the near-term.

Technical levels to watch

A follow through buying interest is likely to boost the cross immediately towards 122.70 (June 7 high) above which the momentum is likely to get extended beyond 123.00 handle towards testing its next major resistance near 123.70 region. On the downside, 121.70-65 region now becomes immediate support, which if broken could drag the cross back towards 121.00 handle.