- EUR/JPY has been stuck in consolidation between the 200-hr SMA and 128.91 having climbed from a low of 127.81 from Friday’s trade.
- EUR/JPY has been riding the coattails of a slightly less sick global equities market and some hints of optimism on the political front on mainland Europe and Brexit.
- Cross capped by 4hr 200-SMA, eyes revert to November low at 127.50.
EUR/USD and European markets were buoyed by news that the Italians would consider adjusting their 2019 budget deficit lower to meet the EU and EC’s preferences. However, the Italian government is sticking to its main 2019 budget goals for now as it awaits a full cost analysis of its most important spending measures for next year, coalition leaders said on Monday – “but left open the possibility of eventually cutting its deficit target,” analysts at Reuters explained.
Euroland data troublesome for the bulls
Meanwhile, data on mainland Europe was a concern. A larger than expected fall in German Ifo business climate index, coming in at 102.00 for November, as compared to 102.8 previous and consensus estimates pointing to a reading of 102.3 weighed on the single currency and when coupled with the German manufacturing PMI decelerating to a 32-month low of 51.6 in November, while services also fell to a 6-month low of 53.3, its no wonder that Draghi noted in his remarks in the EU Parliament that “the data that have become available since my last visit in September have been somewhat weaker than expected.”
EUR/JPY levels
Analysts at Commerzbank noted that the EUR/JPY had backed away from the 2-month resistance line at 128.96 and said that while capped here, attention remains on the current November low at 127.50 and the four-month support line at 127.33:
“Further down lies the October trough at 126.64. While above here longer term scope remains on the topside Although relatively neutral currently. Initial resistance is the November 14 high at 129.23. Above it meanders the 55- and 200-day moving averages at 129.74/90. To reassert upside pressure the market will need to overcome the 130.15 7 th November high.”
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