EUR/JPY recovers toward mid-128s, looks to close day higher following upbeat data

• Retail sales in the euro area rebound in November. 
• Services PMI reading surpasses market expectation.
• Italy's Di Maio says the climate is changing in budget talks.

After losing more than 100 pips on Tuesday with the JPY gathering strength on flight-to-safety, the EUR/JPY pair staged a recovery and rose toward the mid-128s. As of writing, the pair was trading at 128.43, adding 0.4% on a daily basis, 

Earlier today, the data released by the Eurostat showed that retail sales in the euro area increased 0.3% in October following September's 0.5% decline and surpassed the analysts' estimate for a 0.2% growth. Furthermore, the IHS Markit's Services PMI came in at 53.4 to beat the market expectation of 53.1 to provide an additional boost to the shared currency. 

On the other hand, fears over the U.S. Treasury yield curve inversion, which is seen as an early sign of a possible recession, eased on Wednesday and forced the JPY to lose some market interest. However, today's price action seems to be a technical correction and the JPY could continue to find demand as a safe-haven if Wall Street and T-bond yields extend their slide tomorrow when markets re-open. 

Technical levels to consider

The initial resistance for the pair aligns at 129 (Dec. 4 high) ahead of 129.40 (Dec. 3 high) and 130 (psychological level). On the downside, supports are located 127.80 (Dec. 5 low), 127.20 (Oct. 29 low) and 126.60 (Oct. 26 low).