EUR/JPY clings to gains at 113.70 ahead of EU GDP release

Helped by better-than-expected German GDP data, the EUR/JPY cross extended its Wednesday's recovery gains close to 114.00 round figure mark before retracing few pips to currently trade around 113.70 region.

An upbeat sentiment surrounding equity markets drove investors away from the perceived safety of the Japanese Yen and assisted the pair to rebound from session low near 10-day SMA near 113.30 region. Adding to this, a better-than-expected German growth figure for the second quarter of 2016 provided an additional boost and lifted the pair to weekly high level.

Investors now await for preliminary release of the composite Euro-zone GDP print. Amid buoyant sentiment surrounding equity markets, should the reading meets market expectation it would continue helping the cross to build on to its recovery gains.

Technical levels to watch

From current levels 114.00 round figure mark seems to act as immediate resistance, which if conquered seems to trigger a near-term short-covering that is likely to lift the pair immediately towards 114.80 (August 2 high) before aiming to reclaim 115.00 psychological mark and extend its near-term recovery trend towards 115.75-80 region.

On the flip side, session low near 113.30 level, also coinciding with 10-day SMA, now seems to protect immediate downside. A convincing break below this support might negate expectations of any further recovery and turn the pair vulnerable to drop back towards retesting 112.30 support area (August 5 low).