EUR/JPY clings to modest daily gains, bulls await a sustained move beyond 118.00 mark

• EUR/JPY regains some traction on Wednesday, albeit struggled to find acceptance above 118.00.
• Doubts about a potential COVID-19 vaccine benefitted the safe-haven JPY and capped the upside.
• The headline Eurozone CPI missed flash estimates and also did little to provide any fresh impetus.

The EUR/JPY cross held on to its modest daily gains near the 117.80 and had a rather muted reaction to the final Eurozone CPI report.

Following the previous day’s intraday pullback from five-week tops, the cross managed to regain some positive traction on Wednesday. The uptick, however, lacked any strong follow-through and the EUR/JPY cross continued with its struggle to find acceptance above the 118.00 round-figure mark.

The shared currency remained well supported by the Franco-German proposal for a €500 billion European recovery fund. Bulls seemed rather unaffected by Wednesday release of softer-than-expected final Eurozone CPI, which missed the flash estimate and came in at 0.3% for April.

Meanwhile, doubts on a potential vaccine for the deadly virus benefitted the Japanese yen’s perceived safe-haven status and capped the upside for the EUR/JPY cross. Reports on Tuesday indicated that the US drugmaker Moderna had provided insufficient data to determine the vaccine’s efficacy.

The negative factor, to a larger extent, was negated by a strong rally in the US equity futures. This coupled with speculations that the Bank of Japan might introduce extraordinary easing measures at an unscheduled meeting on Friday remained supportive of a mildly bid tone surrounding the cross.

However, it will be prudent to wait for a sustained move beyond the 118.00 mark before positioning for any further near-term appreciating move. Above the mentioned level, bulls might aim to test the 118.50 supply zone before eventually darting towards reclaiming the 119.00 mark.

Technical levels to watch