EUR/JPY tumbles to 117.00 after BOJ holds fire

Yen continues to surge on global risk-off sentiment, with the EUR/JPY cross now trading well below 118.00 handle at the lowest level since Jan. 2013 after BoJ inaction prompted traders to cover their bearish bets against the Japanese currency.

After the FOMC decided to keep its benchmark interest rates unchanged on Wednesday, BoJ followed suit and left its deposit rate and, asset-purchase target, unchanged as we now head towards monetary policy decision announcements from SNB and BoE.

On Wednesday, the EUR/JPY cross attempted a tepid recovery as global risk-on rally diminished the safe-haven appeal of the Japanese currency. On Thursday, global equity markets sell-off triggered a fresh bout of safe-haven buying boosted JPY sharply across the board.

Market participants will now look for some respite from the release of final May CPI print from the Euro-zone during European trading session.

Technical levels to watch

Sustained weakness below 117.00 handle seems to trigger a fresh leg of selling pressure, that might drag the pair below 116.00 round figure mark, towards 115.50 support area, With daily RSI already indicating highly oversold conditions, any further weakness below 115.50 support seems unlikely. Meanwhile on the upside, 118.00 round figure mark, closely followed by 118.70-75 horizontal area, now seems to act as immediate resistance levels. Any further recovery beyond these immediate resistance levels might now be capped at 119.00 important support break-point, turned resistance.