EUR/JPY dips to 116.00 amid prevalent cautious sentiment

The EUR/JPY cross is seen reversing some of its gains recorded on Wednesday as the Japanese Yen continues to gain traction amid weakness in equity markets.

Currently trading around 116.00 handle, down nearly 100-pips from yesterday's swing high, the cross struggled to build on to yesterday's steep gains that helped erase all of the sharp losses posted on Tuesday.

Cautious sentiment around equity markets has been the key factor boosting the safe-haven appeal of the Japanese Yen on Thursday and is exerting some selling pressure on the EUR/JPY cross, despite of a follow-up strength witnessed in the EUR/USD major.

Next on tap would be German prelim CPI and unemployment change for immediate momentum play while the key focus would be on Friday's BOJ monetary policy decision, which would now enable investors to determine the near-term direction for the pair.

Technical levels to watch

On a sustained weakness below 116.00 handle, the pair seems to immediately drift towards 115.50 support, which if broken seems to turn the pair vulnerable to drop back below 115.00 handle, towards 114.80 support. 

On the upside, strength above 116.55-60 immediate resistance now seems to pave way for extension of the bullish momentum towards its next major resistance near 117.70-80 region, also nearing 50-day SMA.