EUR/JPY clings to gains for second straight session ahead of German IFO

The EUR/JPY cross extended the recovery momentum for second consecutive session and has now erased all of its post-ECB declines to monthly lows.

Currently trading around 113.60 level, the cross has been solely driven by broad based offered tone around the Japanese Yen, especially against its US counterpart (USD/JPY) on increasing prospects of an eventual Fed rate-hike action before the end of this year. 

Meanwhile, a range-bound price action around the EUR/USD major, closer to multi-month lows, despite of Monday’s upbeat Euro-zone PMI readings has failed to provide any bullish impetus and the cross remains at the mercy of safe-haven demand for the Japanese Yen. 

Next in focus would be German Ifo Business Climate for October and would be looked upon for additional respite for the shared currency.

Technical levels to watch

Immediate upside resistance is seen at 113.85 (Friday's high) above which the cross seems all set to surpass 114.00 handle and aim towards testing 50-day SMA resistance near 114.15-20 region. 

On the downside, weakness back below 113.50 region could drag the cross towards session low support near 113.30 level below which the slide could get extended back towards 113.00 round figure mark.