EUR/JPY surges back closer to yearly tops post Draghi

Having posted a session low near 124.75 region, the EUR/JPY cross regained traction and turned positive for the third consecutive session.

The cross surged through the key 125.00 psychological mark after the ECB President Mario Draghi's upbeat economic outlook for the Euro-zone. Draghi was noted saying that growth remains above trend and well distributed across the region, while factors weighing on inflation trajectory are temporary.

   •  Draghi Speech: "Reflationary forces have replaced deflationary forces"

Draghi's comments boosted the shared currency across the board and helped the cross to build on recent recovery move from over 1-month lows touched on June 15. Even the prevalent risk-off environment, which tends to support the Japanese Yen's safe-haven appeal, did little to stall the pair's strong up-surge to mid-125.00s, back closer to yearly tops.

Technical levels to watch

Immediate resistance is pegged at yearly tops near 125.80 region, above which a fresh bout of short-covering could lift the cross further beyond the 126.00 handle towards its next resistance near 126.70-75 area.

On the downside, the 125.00 handle now becomes immediate support to defend, which if broken could drag the cross back towards 124.45-40 horizontal support.