EUR/JPY sticks to gains near 2-week tops, just above 129.00 handle ahead of ECB

   •  Italian budget compromise continues to underpin the shared currency.
   •  US-China trade optimism dents JPY’s perceived safe-haven status. 
   •  Traders turn cautious ahead of the latest ECB monetary policy update.

The EUR/JPY cross struggled to build on the positive momentum further beyond 100-day SMA and has now retreated around 20-pips from two-week tops set earlier today.

The cross built on last week's goodish rebound from near four-week lows, with a combination of factors helping gain positive traction for the fifth session in the previous seven. 

The shared currency remained supported by the overnight positive development, wherein Italian Prime Minister Giuseppe Conte proposed to reduce the deficit target to 2.04% of GDP. 

This coupled with fading safe-haven demand, amid optimism over easing US-China trade tensions, was seen weighing on the Japanese Yen and further collaborated to the prevalent strong bid tone. 

However, comments by European Economic Commissioner Pierre Moscovici, raising concerns over possibilities of the French deficit level breaching EU rules, kept a lid on any further up-move.

Adding to this, investors also seemed reluctant to place any aggressive bets and preferred to wait on the sideline ahead of the latest ECB monetary policy update, due in a short while from now.

Hence, it would be prudent to wait for a strong follow-through buying before confirming that the cross might have already bottomed out and traders start positioning for an extension of the near-term positive momentum.

Technical levels to watch