EUR/JPY on the way to 129.55 or 126.46?

Currently, EUR/JPY is trading at 127.96, up 0.16% on the day, having posted a daily high at 128.86 and low at 127.70.

ECB: Change in guidance looming - Westpac

EUR/JPY's rally is facing a minor correction with the benchmarks in the S&P 500 and Dow Jones Industrial Average down following big gains yesterday. The VIX is also up to 12 and thus USD/JPY has dropped sharply weighing on the cross. USD/JPY is testing 111.80 from highs of 112.92.  This all follows European stocks that fell the most in nine months amid expectations for tighter central-bank policies in Europe and the U.S.

The recent remarks from the ECB have also fuelled a mixed picture and ECB President Mario Draghi's comments about reflationary forces replacing deflationary ones were mis-interpreted by markets, according to Kit Juckes, Research Analyst at Societe Generale.

• ECB: Draghi's comments were intended to be more balanced - Societe Generale
   
• USD/JPY retreats from near 113.00 as US stocks hit 2-week lows

EUR/JPY levels

However, EUR/JPY has severed its 2016-2017 downtrend and the outlook is more positive, according to analysts at Commerzbank: "Target 129.55/130.77 50% retracement and the 200 week ma." Should the correction continue, the reversal below 126.46 opens a run to 125.30 2nd June highs.