EUR.JPY steady in Tokyo following overnight drift to the upside

• The cross has been in a steady drift tot he upside, rising from 128.40 to a high of 128.89 while EUR/USD rose from 1.1320 to 1.1380.
• Initial resistances are the 55- and 200-day moving averages at 129.16/73.

Italy submitted a more favourable than anticipated budget deficit proposal (of -2% GDP for 2019), triggering a 12bp fall in the Italian 10 year bond yield, to 3.00%, on a day when German bond yields rose which was supported for the euro. 

At the same time, Sino/USD trade relation optimism helped risk to recover and encouraged a bid on Wall Street which was also supportive and weighed on the yen.

US benchmark closing prices

• The Dow Jones Industrial Average added 157 points, or 0.6%, to close around 24,527.
• The S&P 500 SPX, +0.54% ended higher by 0.5% at around 2,651.
• The Nasdaq Composite COMP, +0.95% ended higher by 0.9% at 7,098.

Weakness in the dollar was helping the cross higher on flows into risk assets which also supported EUR/JPY.  As for US data that weighed on the dollar, the US consumer prices were steady in November, lower gasoline prices keeping a lid on the headline and matched expectations. "The core CPI rose a firmer 0.2% with the annual pace at 2.2% from 2.1%. This was right in line with consensus. Real average hourly earnings continue to firm, the annual rate hitting 0.8%, its strongest since mid-2017," analysts at Westpac noted.

EUR/JPY levels

Analysts at Commerzbank noted that EUR/JPY continues to recover from the 4 month support line at 127.74. 

"The near term risk is for further recovery. Initial resistances are the 55- and 200-day moving averages at 129.16/73. To reassert upside pressure the market will need to overcome the 130.15 7 th November high. Further down lies the October trough at 126.64. While above here longer term scope remains on the topside."