EUR/JPY hits fresh weekly highs, around 131.00 handle on Draghi’s comments

The EUR/JPY cross reversed a knee-jerk dip below the key 130.00 psychological mark and surged to fresh weekly tops, closer to the 131.00 handle.

The cross gained fresh bullish traction and turned sharply higher after the ECB upgraded its economic growth forecast for 2017 to 2.2%, marking its fastest pace since 2007, from 1.9% projected earlier. 

The shared currency got an additional boost from the ECB President Mario Draghi's comment, in his introductory statement at the post-meeting press conference that the bulk of QE decisions will be taken in October. 

Draghi, however, showed broad dissatisfaction with inflationary trajectory and attributed the downward revision of inflation projection to a sharp FX appreciation, though was noted saying that exchange rate was not a policy target. 

Technical levels to watch

Momentum beyond the 131.00 handle could get extended towards 131.35-40 hurdle, above which the cross is likely to aim towards reclaiming the 132.00 handle. 

On the flip side, any retracement might now find immediate support near mid-130.00s, which if broken might turn the cross vulnerable to drop below the 130.00 handle and head towards testing 129.40-30 strong horizontal support.