EUR/JPY hits fresh 4-week high ahead of ECB decision

A fresh wave of buying interest seems to have emerged around the shared currency during early European session, lifting the EUR/JPY cross to a fresh 4-week high level. 

The Japanese currency has been witnessing selling pressure since early Asian session after news suggested that the Japanese government might be considering a supplementary budget to the tune of 20 trillion yen, which is likely to be approved by early August. The Yen also remained on defensive mode after a report showed business activity slowed during May. 

Meanwhile, the shared currency has held steady as focus now shifts to today’s key event, ECB monetary policy decision, which although is unlikely to announce any change to its current monetary policy stance but could trigger some volatile moves across EUR pairs.

From a technical perspective, the pair is now moving closer to the very important 50-day SMA resistance near 118.60-65 region. Since the beginning of this year, the pair has repeatedly failed to move / sustain its strength above this important moving average. Hence, a clear strength above this key resistance should open room for continuation of the pair's recovery trend in the near-term.

Technical levels to watch

On a sustained move above 118.60-65 immediate resistance, the pair seems to immediately dart towards 119.20-30 intermediate resistance before heading beyond 120.00 psychological mark, towards testing its next major resistance near 120.80 region.

Meanwhile on the downside, weakness below session low support near 117.55-50 area is likely to get extended towards 117.00-116.85 support and eventually towards a major support near 115.80-60 region. A convincing break below 115.80-60 important support would negate prospects of any further recovery and turn the pair vulnerable to continue drifting lower in the near-term.