EUR/JPY trades at Y129.98 at writing,......>

EURO-YEN: EUR/JPY trades at Y129.98 at writing, representing best levels, having

bounced from a low at Y129.20. The pair rallied on Friday on the back of EU's

Moscovici sounding a little warmer re: Italy & source reports claiming that

Italy's ruling coalition sees potential for a 2.1% deficit/GDP target (denied by

the leader of 5-Star over the weekend & played down in press reports this

morning), although EUR remains vulnerable to the impact of political headlines,

with Italy's response to EU letter regarding clarifications on their Budget

scheduled for later today (due by 1000GMT). Friday also saw Moody's downgrade

Italy by 1 notch to Baa3, but crucially, the ratings agency changed the

country's outlook to stable.

- In Monday's early trading JPY strengthened in sync with a lower Nikkei 255, as

risk off flows centering on an Axios story stating that Pres. Trump has no

intention of easing his tariffs on China played out, but EUR/JPY quickly

recouped the initial decline, as Chinese stocks rallied hard.

- Bulls focus on recovering the psychological Y130.00 level ahead of challenging

the 200-DMA at Y130.66.