EUR/JPY challenges 2-day highs beyond 118.00

• EUR/JPY regains the 118.00 handle and above.
• Rising US yields support JPY-selling.
• US PCE, Personal Income/Spending, U-Mich next on tap.

The rebound in US yields is fuelling further the selling bias in the Japanese safe haven and lifts EUR/JPY back above the critical hurdle at 118.00 the figure.

EUR/JPY looks to data, trade

The cross is finally seeing some light at the end of the tunnel following seven consecutive daily pullbacks, shedding nearly 3 cents since monthly peaks just above the 120.00 barrier.

The now better tone in yields of the key US 10-year note are sustaining the selling mood in JPY, which in turn morphs into extra upside in the cross. In the same line, the single currency has managed to put some distance from recent lows and is now staging a mild recovery.

In the meantime, investors’ focus remains on the US-China trade developments and the high-level talks scheduled for early October. Consensus among market participants is divided between hopes of a deal in the not-so-distant future on one side, and rising scepticism on the other.

Data wise in Euroland, September’s preliminary inflation figures in France came in below estimates and now see the CPI contracting 0.3% inter-month; Italian Consumer Confidence ticked a tad higher this month and the Consumer Confidence in the bloc improved to -6.5 during the same period of time.

Later in the NA session and likely to keep the attention on the broader risk appetite trends, US inflation figures tracked by the PCE is due seconded by Durable Goods Orders and Personal Income/Spending.

EUR/JPY relevant levels

At the moment the cross is advancing 0.33% at 118.14 and faces the next up barrier at 118.88 (55-day SMA) seconded by 120.01 (monthly high Sep.13) and then 120.36 (100-day SMA). On the flip side, a break below 117.44 (low Sep.27) would expose 116.56 (low Aug.26) and finally 115.86 (2019 low Sep.3).