EUR/JPY muted around 129.00 handle post ECB announcement

The EUR/JPY cross surrendered all of its early tepid gains and dropped to the lower end of daily trading range post-ECB decision.

The cross dipped below the 129.00 handle after the European Central Bank left its key benchmark interest rates unchanged, with refinance rate, deposit facility and marginal lending facility held at 0.0%, -0.4% and 0.25% respectively. 

The central bank reiterated its readiness to increase the bond purchase program in terms of size and/or duration, if needed, while the Governing Council sees rates at current level for an extended period of time.

Bulls seemed unimpressed as the statement lacked any clues over the central bank's intension to reduce its ongoing bond purchase program and hence, focus would remain on the post meeting press conference, where comments from the ECB President Mario Draghi would now determine the next leg of directional move for the shared currency. 

Technical levels to watch

Sustained weakness below 128.55-50 area has the potential to drag the cross below the 128.00 handle towards its next support near 127.40 level. Alternatively, strong follow through buying interest beyond 129.55-60 region now seems to pave way for continuation of the pair’s near-term bullish trajectory even beyond the key 130.00 psychological mark towards its next major hurdle near the 131.00 handle.