Having posted a session low near mid-124.00s, the EUR/JPY cross regained traction but struggled to build on to its recovery move despite of upbeat data from the Euro-zone.
Currently trading around 125.10-15 region, the cross had a muted reaction to the upbeat release of German Ifo Business Climate Index, which jumped to the highest level since June 2011 and came-in at 114.6 for May as against previous month’s 113.00 and 113.1 expected.
Adding to this, the flash version of composite Euro-zone PMI showed continuous improvement in business activity in the region, holding at 56.8 for May as compared to 56.6 expected.
Meanwhile, mixed releases of PMI numbers from the Euro-zone’s two-largest economies, France and Germany, did little to distort the positive sentiment surrounding the common currency and helped the cross to hold its neck above the key 125.00 psychological mark.
With markets looking beyond the tragic terrorist attack in the city of Manchester and stability returning back to financial markets, as depicted by positive trading sentiment surrounding European equity markets, deteriorating demand for traditional safe-haven assets, including the Japanese Yen, further collaborated to the pair’s up-move.
Technical levels to watch
Immediate resistance is pegged near 125.80 level (one-year high), above which the cross seems all set to extend its upward trajectory towards 126.40-45 horizontal resistance en-route 126.75 level and the 127.00 handle. On the downside, mid-124.00s now seems to have emerged as immediate support, which if broken could drag the cross back below the 124.00 handle towards testing an important support near 123.65 level.