EUR/JPY plunges to 3-week lows, around 122.70 on ECB headlines

A fresh wave of intense selling pressure around the shared currency dragged the EUR/JPY cross to its lowest level in nearly three week.

Spot extended last week's reversal move from levels beyond the key 125.00 psychological mark and traded with negative bias for the fourth consecutive session. The selling pressure intensified on news headlines, via Bloomberg, that ECB, in its draft forecasts, is said to cut inflation outlook through 2019. 

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Ahead of Thursday's ECB monetary policy decision, dovish outlook now seems to have poured cold water on any expectations of an immediate rate-hike and was seen weighing on the shared currency. 

Adding to this, persistent safe-haven demand, ahead of the crucial UK general election on Thursday, remained supportive of the bid tone surrounding the Japanese Yen and collaborated to the pair's sharp slide to the lowest level since May 18.

From a technical perspective, the cross has now moved on the verge of a fresh bearish breakdown and hence, seems more likely to extend near-term corrective slide from yearly tops touched in May.

Technical levels to watch

Immediate support is pegged near mid-122.00s, below which a fresh bout of selling pressure is likely to drag the cross immediately towards the 122.00 handle en-route 50-day SMA support near 121.40 region.

On the upside, any recovery move back above the 123.00 handle now seems to confront fresh supply near 123.35-40 region, which if cleared might trigger a short-covering bounce back towards the 124.00 round figure mark.