EUR/JPY clings to gains near yearly tops on upbeat ZEW survey

The EUR/JPY cross failed to sustain early move beyond the 134.00 handle, the highest level since Dec. 2015, and retreated to 133.60 level, albeit rebounded few pips post German ZEW survey.

The pair's quick retracement of nearly 60-pips from session tops stalled after the latest German ZEW economic sentiment index rebounded sharply from a 10-month reading of 10.0 in August to 17.0 in September. The ZEW current situation index also improved to 87.9 during the reported period, up from previous month's 86.7 and 86.6 expected. 

   •  German Sept ZEW Surveys: Upbeat across all indicators

Today's better-than-expected ZEW economic survey results provided a minor boost to the shared currency and held the cross within striking distance of the 134.00 handle.

Meanwhile, the prevalent risk-on environment coupled with the latest political developments in Japan continued weighing on the Japanese Yen and remained supportive of the strong bid tone surrounding the cross.

Technical levels to watch

On a sustained move beyond the 134.00 handle, the cross is likely to surpass 134.20-25 intermediate hurdle and head towards testing Nov. 2016 swing high resistance near the 134.60 region.

Meanwhile, on the downside, any retracement below mid-133.00s now seems to find support near 133.30-25 area, which if broken could drag the cross below the 133.00 handle towards its next support near the 132.40-35 region.