EUR/JPY defends support at 120 despite the upward revision of Japan's GDP

• EUR/JPY dropped 13 pips after the upbeat Japanese GDP data. 
• The pair is still holding above the psychological support of 130.00. 
• A break lower looks likely with the US index futures flashing losses. 

The bid tone around the Japanese Yen strengthened following the upbeat Japanese gross domestic product (GDP), but so far, the EUR/JPY cross has been able to avoid a drop below the psychological level of 120.00.

Japan’s economy grew an annualized 1.8% in July-September, much more than the initial estimate of a 0.2% expansion, the Cabinet Office reported a few minutes before press time. The upward revision bettered the estimate for a 0.7% by a big margin.

On a quarter-on-quarter basis, GDP expanded 0.4%, compared with a 0.1% growth in the initial reading and beating the median forecast of 0.2% growth.

Further, Japan's current account surplus JPY 1,816.8 billion in October compared to the median estimate of JPY 1,797.8 billion and up from the preceding month's JPY 1,612.9 billion.

EUR/JPY dropped 13 pips to hit a session low of 120.00 immediately following the release of the better-than-expected data at 23:50 GMT. Currently, the pair is trading at 120.04, representing marginal losses on the day.

The psychological support of 120.00 could be breached, as the futures on the S&P 500 are currently reporting a 0.15% decline. The technical outlook is also bearish with the daily chart showing a downside break of the trendline connecting Nov. 14 and Nov. 25 lows.

Technical levels