The EUR/JPY cross staged a modest recovery bounce post German data and reversed majority of its daily losses to sub-117.00 level, near 5-month lows touched during early European session on Tuesday.
Currently trading around 117.30-40 band, the release of better-than-expected German ZEW survey for April provided a temporary respite for the shared currency. Spot gained some traction after German ZEW Economic Sentiment index surpassed expectations and jumped to the highest level since August 2015, coming-in at 19.5 for April.
Moreover, the Japanese Yen's safe-haven demand was also seen fading amid receding risk-aversion trade, as depicted by a tepid recovery from lows for the European equity markets, and further collaborated to the pair's recovery from the lowest level since Nov. 18.
It, however, remains to be seen if the recovery is backed by some genuine buying interest or is merely a short-covering bounce from near-term oversold conditions, in absence of any negative surprise from Euro-zone data.
Technical levels to watch
Any further recovery beyond 117.55 level (session high) is likely to confront strong hurdle near 117.70 region (200-day SMA), above which an additional bout of short-covering could lift the pair towards 118.40-50 strong horizontal resistance.
On the downside, weakness back below the 117.00 handle now seems to accelerate the slide towards 116.60 intermediate support before the cross eventually heads towards testing 116.00 round figure mark.
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