EUR/JPY consolidating around 118.00 handle ahead of EU PMIs

The EUR/JPY cross struggled to build on Tuesday's up-move beyond 118.00 handle, to a four-month high, and witnessed a mild retracement ahead of Euro-zone PMI prints.

Currently hovering around 118.00 mark, the cross on Wednesday has failed to extract benefit from the bid tone surrounding the EUR/USD major and is being weighed down by prevalent cautious sentiment in equity markets. In fact, indices futures are pointing to weaker opening for European equity markets, which is supportive of the Japanese Yen's safe-haven demand and restricting further up-move for the cross.

Next in focus would be the flash version of composite Euro-zone PMI prints (services and manufacturing), proceeded by PMI releases from the region's two largest economies - Germany and France.

Apart from Euro-zone PMI numbers, broader market risk-sentiment would continue to derive demand for safe-haven assets (JPY) and eventually provide impetus for the EUR/JPY cross.

Technical levels to watch

Immediate downside support is pegged at 117.80-75 region, which if broken seems to accelerate the slide immediately towards 117.40 horizontal support en-route its next important support near 117.00 handle. Meanwhile, momentum above 118.15 (yesterday's high) seems to pave way for a sharp up-move towards the very important 200-day SMA resistance near 118.60-65 region, which if cleared has the potential to continue boosting the cross further towards 120.00 psychological mark in the near-term.