EUR/JPY retraces from 3-week high, still positive at 117.50

The EUR/JPY cross is easing from a 3-week high and has now dropped back to below 118.00 handle to currently trade around mid-117.00s.

Mostly in-line with expected Chinese GDP and industrial production data extended some additional boost to the prevalent global risk-on sentiment. The Japanese currency extended its recent sell-off for fifth consecutive day against its European counterpart, with the EUR/JPY cross surging back above 118.00 to 118.40 during early Asian trading session.

Since the beginning of this week, the Japanese currency has witnessed intense selling pressure on expectations of additional fiscal stimulus from the Japanese government.

The EUR/JPY traders now seem to lock-in some of their profits after the pair's sharp up-surge of nearly 700-pips from weekly lows as they now look forward to the final print of Euro-zone CPI number for the month of June, later during European trading session. 

Investors would also look forward to a slew of US economic releases, including - CPI, retail sale, manufacturing and consumer confidence data, which would now provide fresh impetus and drive investor sentiment towards traditional safe-haven assets - like Yen.

Technical levels to watch

From current levels, 117.00 level seems to provide some immediate support, below which the pair seems to extend its slide immediately towards 116.00 horizontal support. A follow through selling pressure below 116.00 handle might negate possibilities of any further bullish momentum and is likely to drag the pair towards its previous resistance, now turned support, near 114.50 region.

On the flip side, bullish momentum back above 118.00 handle, leading to a follow through buying interest above 118.40-50 resistance, has the potential to continue boosting the pair in the near-term, towards its pre-Brexit highs resistance near 121.00 mark, with intermediate 120.00 psychological mark acting as intermediate resistance.