EUR/JPY turns flat at 116.50 ahead of German Ifo

The EUR/JPY pair's tepid recovery towards 117.00 region got sold into and the pair is now turning back into negative territory to currently trade around mid-116.00s.

On Monday, the Japanese currency got some respite after the release of better-than-expected country's trade balance data for June. Adding to this, mixed investor sentiment provided an additional boost to the safe-haven appeal of the Japanese Yen.

Meanwhile, the shared currency witnessed a subdued trading action as traders now await for the release of German Ifo Business Climate index for July for some short-term momentum play. 

However, this week's key event risk remains the very important BOJ monetary policy meeting on Friday. In the meantime, traders will also confront some macroeconomic releases that includes - Euro-zone flash CPI and GDP estimates, and Tokyo Core CPI, which would assist investors to determine the near-term direction for the pair. 

Technical levels to watch

Sustained weakness below 116.50 level seems to continue exerting additional selling pressure, dragging the pair below 116.00 handle. A subsequent drop below 116.00 handle now seems to open room for extension of the pair's near-term weakening trend towards its next major support near 114.50 region.

On the flip side, recovery back above 117.00 handle, and a follow through buying interest above 117.70-75 resistance, has the potential to lift the pair towards 50-day SMA strong resistance near 118.50 region.