EUR/JPY consolidates in a range below mid-126.00s

The EUR/JPY cross maintained its bid tone through the mid-European session and was last seen hovering near the top end of its daily range, just below the 126.50 level.

The cross built on the previous day's modest bounce from sub-126.00 level and edged higher for the second consecutive session. The uptick was supported by the offered tone surrounding the safe-haven Japanese yen, though a combination of factors kept a lid on any strong gains.

The latest optimism over an imminent Brexit deal remained supportive of the underlying bullish sentiment around the global equity markets. This, in turn, was seen as one of the key factors that undermined demand for traditional safe-haven currencies, including the Japanese yen.

The supporting factor, to some extent, was offset by concerns about the discovery of a new coronavirus strain and imposition of lockdowns/travel restrictions in the UK. Apart from this, relatively thin liquidity conditions further collaborated towards capping the upside for the EUR/JPY cross.

In the absence of any major market-moving economic releases, the cross seems more likely to continue with its range-bound price action. That said, the incoming Brexit-related headlines could infuse some volatility and produce some short-term trading opportunities around the EUR/JPY cross.

From a technical perspective, the cross has been oscillating in a broader trading range since the beginning of this month. This further makes it prudent to wait for a sustained breakthrough the trading range before positioning aggressively for any firm near-term direction.

Technical levels to watch