EUR/JPY sticks to modest recovery gains, above 128.00 mark post-ECB

• ECB leaves interest rates unchanged, as was widely anticipated.
• Risk-recovery denting JPY’s safe-haven status and remain supportive.

The EUR/JPY cross held on to its modest recovery gains, just above the 128.00 handle, and had a rather muted reaction to the latest ECB decision.

The cross moved little after the ECB, at the October meeting, the reaffirmed to wind down its bond-purchase program by the end of this year and leave interest rates unchanged at least until next summer.

The decision was on expected lines and did little to provide any fresh bullish impetus to the shared currency. However, a goodish rebound across European equity markets was seen weighing on the Japanese Yen's safe-haven status and helped the cross to hold above 2-month lows, set earlier today.

Market participants also seemed reluctant to place any aggressive bets and now look forward to the post-meeting press conference, where comments by the ECB President Mario Draghi will play an important role in driving sentiment surrounding the common currency and produce some meaningful trading opportunities.

Technical levels to watch

A sustained move beyond the 128.30-40 zone is likely to accelerate the up-move towards reclaiming the 129.00 handle en-route 100-day SMA barrier near mid-129.00s. On the flip side, weakness back below the 128.00 mark might continue to find some support ahead of mid-127.00s, below which the cross is likely to accelerate the fall towards the 127.10-127.00 support area en-route the 126.60-55 region.

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