EUR/JPY stages a solid comeback ahead of ECB Draghi

The cross in the EUR/JPY stalled its downward spiral and rebounded sharply higher in the European session, with all eyes now focused on ECB Draghi’s speech.

EUR/JPY tests 113 handle

The EUR/JPY pair rallies +0.58% to fresh session highs at 112.94, rebounding from near two-month lows reached just ahead of 112 handle. Strong gains seen in the EUR/USD pair is seen underpinning the rebound in the cross, while ongoing broad yen weakness on the back of post-BOJ correction, also adds to the bullish tone in the prices.

Focus shifts to the upcoming speech by ECB Chief Draghi for fresh insights on the monetary policy program, especially after the BOJ and Fed policy disappointment. Besides, Friday’s flash manufacturing PMI reports from across the Euro area will be also closely eyed amid a lack of relevant economic releases from the US docket.

EUR/JPY Levels to consider  

The pair has an immediate resistance at 113.33 (5-DMA) and from there to 114.03 (10-DMA). On the flip side, support is seen at 112.50 (psychological levels) below which it could extend losses to towards 112.02 (post-FOMC low).