The EUR/JPY cross failed to build on upbeat EZ data-led up-move and has now retreated back below the key 125.00 psychological mark.
Despite of the impressive German Ifo Business Climate Index and better-than-expected composite Euro-zone PMI print, the cross lacked any follow through buying interest and stalled its up-move near 125.40 region. In absence of any fresh fundamental triggers, the current level of slide could be solely attributed to some profit taking.
A mildly offered tone surrounding the USD/JPY major, on safe-haven demand in wake of the political turbulance in the US and the latest terrorist attack in the city of Manchester, had failed to provide any additional boost to the pair’s up-move during early European session and prompted traders to take some profits off the table following the pair’s failed attempt to move past 125.35 horizontal resistance area for the second consecutive day.
Despite of the pull-back, the cross, for the time being, has managed to hold above session lows near mid-124.00s touched in the aftermath of the latest terrorist attack in the city of Manchester. Hence, it would be prudent to wait for a follow through selling pressure before confirming that the cross might have topped out in the near-term.
Technical levels to watch
A follow through weakness below mid-124.00s immediate support, the pair is likely to accelerate the slide towards the 124.00 handle en-route an important horizontal support near 123.65 level. On the upside, 125.35 level now seems to have emerged as immediate resistance and is followed by resistance near 125.80 level (one-year high). A convincing break through yearly tops would set the stage for continuation of the pair’s upward trajectory beyond the 1.2600 handle towards its next hurdle near 126.40-45 horizontal area.