EUR/JPY advances to fresh 2019 high above 126 on Wednesday

• Business and consumer sentiment in the euro area improves slightly in February.
• Wall Street rebounds after starting the day in the red.
• Rising US T-bond yields weigh on the JPY.

The EUR/JPY pair slumped to 125.50 area in the early European morning and reversed its course after finding support there to climb to its highest level of 2019 at 126.36. As of writing, the pair is trading at 126.20, adding 0.15% on a daily basis.

Earlier in the day, the European Commission’s monthly report revealed that the Consumer Confidence Index rose slightly in February to -7.4 from -7.9. Furthermore, The Services Sentiment Index, Business Climate Index and the Economic Sentiment Index all came in better than market expectations to help the shared currency gain traction on Tuesday. On a negative note, the industrial confidence edged down to -0.4 from 0.6.

In the second half of the day, the sharp upsurge seen in the US Treasury bond yields, which  generally shows a strong adverse correlation with the JPY strength, allowed the pair to continue to push higher. At the moment, the 10-year reference is up 1.75% on the day.

In the Asian session on Thursday, industrial production and retail trade data from Japan will be looked upon for fresh impetus.

Technical levels to watch for