EUR/JPY clings to gains near 5-week tops after Draghi

After an initial wobbles below the 121.00 handle on ECB announcement, the EUR/JPY cross regained traction and surged through mid-121.00s to 5-week tops.

Currently trading around 121.70 region, the shared currency demand picked up pace after the ECB President Mario Draghi, during the post-meeting press conference, turned hawkish while upgrading the region's inflation and growth forecasts. 

ECB's Draghi says risk of deflation largely disappeared

The central bank's upbeat economic outlook was enough to driver traders towards covering their short-Euro positions, lifting the cross to its highest level since early Feb.

ECB's Draghi: 2017 inflation seen at 1.7% vs. 1.3%

Meanwhile, an offered tone around the Japanese Yen, as depicted by a follow through up-move in the USD/JPY major, further collaborated to the strong bullish sentiment surrounding the EUR/JPY cross.

It, however, remains to be seen if the shared currency is able to build on to ECB-led strong recovery gains or the current up-move is just on the back of short-covering, which might run into fresh offers at higher levels.

Technical levels to watch

Upside resistance is pegged near 122.00 mark, followed by 122.55-60 area and 123.00 round figure mark. Support on the downside is seen near 121.40-30 region, below which the slide could get extended below 121.00 handle towards important horizontal support near mid-120.00s.