EUR/JPY retreats after hitting fresh 5-month peak

After hitting a fresh multi-month highs, the EUR/JPY cross retreated over 65-pips and dropped to 121.20 region. The cross, however, has managed to bounce off session low and is currently hovering around 121.35 level.

Near-term range-bound price action around the shared currency, amid prevailing uncertainty around the Italian constitutional referendum on Sunday, has failed to provide any impetus and the cross has been solely driven by weakness in the Japanese Yen. Hence, the prevalent risk-off mood, which tends to benefit traditional safe-haven assets, including Yen, was seen exerting some selling pressure around the major. 

Moreover, the final outcome of the Italian referendum is expected to trigger sharp swings in the shared currency. Hence, traders seemed inclined to take some profits of the table, following the pair’s strong up-move of over 300-pips in the previous three sessions, and further contributing to the prevalent offered tone on Friday. 

Technical levels to watch

Below session low support near 121.20 level, the pair is likely to drift below 121.00 round figure mark and head towards testing 120.85 support (yesterday's low), which if broken is likely to extend the corrective slide further towards 120.00 psychological mark. On the upside, momentum above 121.65 level now seems to lift the cross beyond session peak towards reclaiming 122.00 handle (June 24 high).