EUR/JPY recovers after hitting fresh multi-month lows

The shared currency remained under some selling pressure on Thursday, dragging the EUR/JPY cross back below the 200-day SMA important support to fresh 4-1/2 month lows.

Spot prolonged its bearish slide from the vicinity of the 123.00 handle, touched during mid-March, and accelerted the slide after the ECB President Mario Draghi reiterated that monetary accommodation is still appropriate and inflationary pressure remains subdued. Against the backdrop of recent ECB headlines, Draghi's dovish comments added on to the bearish pressure surrounding the shared currency.

Adding to this, a fresh wave of global risk-aversion trade, as depicted by negative trading sentiment around equity markets, further boosted the Japanese Yen's safe-haven appeal and collaborated to the pair's slide to its lowest level since Nov. 21. 

The pair, however, has managed to bounce off around 35-40 pips from multi-month lows and is currently trading around 117.80-85 band as traders now look forward to the ECB Monetary Policy Meeting minutes, due later during the day. Also in focus would be speech by Deutsche Bundesbank President Jens Weidmann during European trading session.

   •  ECB minutes in focus – Danske Bank

Technical levels to watch

Bears would be eyeing for a decisive break through multi-week lows support near 117.35 region, below which the cross is likely to accelerate the slide towards the 117.00 handle before eventually dropping to test 116.40-35 support area. On the flip side, any recovery back above 118.00 round figure mark now seems to face stiff resistance near 118.40-45 horizontal level, above which a bout of short-covering could lift the cross back beyond the 119.00 handle towards testing its next hurdle near 119.30 region.