EUR/JPY surges through 123.00 handle retreats after ECB decision

The EUR/JPY cross broke through recent consolidation phase and surged through 123.00 handle to hit a fresh six month high after ECB decision. 

The cross, however, quickly retreated from higher levels and is currently trading back below 123.00 mark. The shared currency surged across the board after ECB’s governing council decided to leave interest rates unchanged and extend its current €80bn QE program only until April 2017, which would then be reduced to €60bn until the end of Dec 2017, or beyond if necessary. Market participants were expecting the central bank to extend its asset purchase program for at-least six month. 

Next in focus would be ECB President Mario Draghi’s press conference, where investors will now look for further clues over an early tapering, which if hinted should trigger a further knee-jerk bullish reaction for the shared currency.

 The ECB will also publish updated growth and inflation forecasts, including a first look at 2019.

Technical levels to watch

Sustained momentum above 122.90-123.00 immediate resistance has the potential to continue boosting the pair further towards 123.75 resistance area with 123.50-55 region acting as intermediate resistance. On the downside, a follow through selling pressure below 122.00-121.90 immediate support is likely to accelerate the slide towards 121.25 intermediate support before the pair breaks through 121.00 handle and aim towards testing its next major support near 120.15-10 region.