The EUR/JPY cross built on previous session's strong up-move and surged closer to the key 125.00 psychological mark during early European session on Monday.
The spot continued gaining traction for the second consecutive session and the up-move got an additional boost from today's upbeat German Ifo Business Climate Index, coming-in at 115.1 for June as compared to 114.6 previous and 114.4 expected. Meanwhile, the current assessment index ticked higher to 124.1 (123.2 previous) while Ifo expectations also rose by more-than-expected to 106.8 for June.
Adding to this, the prevalent risk-on environment, as depicted by positive trading sentiment around European equity markets, was seen weighing on the Japanese Yen's safe-haven appeal and further collaborated to the pair's strong up-move to the highest level since June 2.
With the only EZ data out of the way, broader market risk sentiment would continue to be an exclusive driver of the pair's movement and a follow through up-move now seems a distinct possibility.
Technical levels to watch
From current levels, 125.30-35 region is likely to act as immediate resistance, above which the cross is likely to aim towards testing yearly tops resistance near 125.75-80 area en-route the 126.00 handle.
On the downside, any retracement from higher levels now seems to find immediate support near 124.50-40 region, which if broken could drag the cross back towards the 124.00 handle.
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