EUR/JPY Extends Recovery, Heading Towards 124.00 Level
Comments from Japan’s finance minister Taro Aso weakened JPY sharply against its counterparts with the EUR/JPY pair surging to session high of 123.71.
On Monday, Japan's finance minister Taro Aso made a direct reference to the possibilities of a intervention in the forex market should the Japanese Yen appreciates further. Aso stated that the ministry was “prepared to undertake intervention” to curb access volatility and sharp appreciation of Yen, which has been a key concern for the Japanese policy makers as stronger domestic currency makes country’s exports less competitive.
The EUR/JPY rebounded sharply and is currently trading at two-week high level of 123.65, above its short-term moving averages (10, 20-day SMAs). Moreover, the pair has rebounded from April lows support near 121.70-75 area, possibly suggesting a near-term bottom formation near 122.00 handle and hence, increasing the possibilities of extending its recovery trend in the near-term.
Technical levels to watch
From current levels, the pair seems to make a fresh attempt to test 124.00 handle, which if conquered should be aiming for its next major resistance at 50-day SMA region, currently near 124.80 area.
On the flip side, 20-day SMA near 123.55-50 zone, closely followed by 10-day SMA near 123.30-25 area, might now act as immediate support levels. Only a weakness back below these immediate support levels would negate the near-term bullish bias and drag the pair, thus dragging the pair back towards retesting the very important support near 122.00 handle.