EUR/JPY recovers back closer to 130.00 handle post EZ CPI

The EUR/JPY cross pared some of its early losses and is now eyeing to reclaim the key 130.00 psychological mark following the release of Euro-zone CPI estimates.

The spot caught some fresh bids after the preliminary Euro-zone inflation figures showed headline CPI rose 1.3% y-o-y in July, matching consensus estimates, while core CPI (excluding food, energy, alcohol, and tobacco items) bettering expectations at 1.2% during the reported month. 

   •  Eurozone flash Core CPI surprises positively in July

With core CPI jumping to 4-year highs, today's inflation figures seems to have raised expectations for a possible ECB tapering at the September meeting and provided a minor lift to the shared currency. 

The offered tone, however, remains intact amid prevalent cautious environment, which tends to benefit the Japanese Yen's safe-haven appeal.

Technical levels to watch

A follow through selling bias below 129.55 horizontal level has the potential to continue dragging the cross towards the 129.00 mark en-route the 128.55-50 important support. 

On the flip side, sustained move above the key 130.00 psychological mark could lift the cross back towards mid-130.00s important hurdle, above which the momentum could get extended even beyond 17-month highs resistance near 130.75-80 region towards reclaiming the 131.00 handle.