EUR/JPY consolidating recent gains to multi-month highs, Draghi in focus
The EUR/JPY cross snapped seven consecutive days of winning streak to 120.00 psychological mark and dipped below 119.00 handle during early Asian session on Monday.
The cross, however, has managed to stage a goodish recovery of around 50-pips from session low and is currently trading currently trading around 119.30-35 region. Improving investor risk-appetite, as depicted by a recovery in Asian equity markets, was seen weighing on the Japanese Yen's safe-haven appeal. This coupled with the ongoing recovery in the EUR/USD major assisted the pair's recovery from session low.
The recovery, however, lacked momentum amid cautious sentiment surrounding European equity markets, as depicted by negative opening at the start of a fresh trading week. Nevertheless, the cross remained closer to Friday’s multi-month highs and hence, Monday’s price action could be categorized as a consolidation phase following its recent leg of sharp up-move
Moreover, investors also seemed cautious ahead of ECB President Mario Draghi's testimony about the European Central Bank's perspective on economic and monetary developments and the consequences of the Brexit before the European Parliament's Economic Committee, later during NA session. Ahead of the ECB's next monetary policy meeting on December 8, Draghi's comments would influence sentiment surrounding the shared currency and eventually provide fresh impetus for the EUR/JPY cross.
Technical levels to watch
Further corrective slide is likely to find support at the very important 200-day SMA resistance break, now turned support, near 118.60 region. Sustained break below 200-day SMA support might now trigger a near-term corrective slide and drag the cross below 118.00 handle towards its next major support near 117.50-40 region. On the upside, 119.75 level now becomes immediate hurdle above which a fresh leg of up-move could now lift the cross beyond 120.00 psychological mark towards its next major hurlde near 121.00 region.