EUR/JPY retraces to 113.40 amid cautious trade

After failing to build on to its two days of recovery gains, the EUR/JPY cross retraced on Tuesday and is currently trading near session low around 113.40-35 band.

Tuesday's fall was primarily driven by weakness around the shared currency. Moreover, lower-than-expected German trade balance data for June added on to the selling pressure. 

Meanwhile, a cautious investor sentiment surrounding equity markets is seen boosting demand for the perceived safety of the Japanese currency and further dragging the EUR/JPY cross lower.

From technical perspective, the pair's bounce-off 3-week low has failed to clear its immediate resistance near 113.75 region marking 23.6% Fibonacci retracement level of 118.46-112.31 downslide. Hence, any follow through selling pressure would suggest that the pair's downward trajectory might still get extended in the near-term.

Technical levels to watch

From current levels, weakness below 113.20 level, and a subsequent break below 113.00 round figure mark, would confirm extension of the pair's depreciating move and could drag the pair immediately to 112.50 support before dropping further towards its next major support near 111.00 round figure mark.

On the flip side, strong bullish momentum above 113.75-80 immediate resistance, leading to a momentum above 114.00 round figure mark, seems to set the stage for additional near-term recovery immediately towards 38.2% Fibonacci retracement level resistance near 114.70 region and eventually towards an important confluence resistance near 115.20-25 region, comprising of 20-day SMA and 50% Fibonacci retracement level.