EUR/JPY - upside capped by Italian election results

• Italy heads for a hung parliament. 
• But, EUR finds bids as German parties strike coalition deal. 

EUR/JPY fell from 130.51 to 129.77 in early Asia after exit polls showed Italy is heading for a hung parliament. 

Also, of slight concern is the strong performance of the anti-establishment (anti-Euro) parties. For instance, the anti-establishment has emerged as the largest single party, which means it will likely be the pillar of the next government. 

However, the drop below 130.00 was short-lived, supposedly due to the news that Germany will finally get a new government after five months of political deadlock. So, as of writing, the pair is trading largely unchanged on the day at 130.22. Ahead in the day, the pair may find it hard to scale the Asian session high of 130.51 if the equities remain risk-averse on trade war fears and Italian-German yield spread widens in response to a hung parliament in Italy. 

EUR/JPY Technical Levels

A convincing break above 130.51 (Asian session high) would open up upside towards 131.16 (10-day moving average) and 131.31 (200-day moving average). On the downside, breach of support at 130.04 (Feb. 28 low) could yield a re-test of 129.77 (Asian session low) and 129.56 (previous day's low).