Falls After Soft EZ Data With Italian Political Matters In Focus

Monday was an inside day for EUR/JPY as the pair retreated after a considerable miss in German retail sales (with the prior reading revised lower), followed by a miss in Spanish M'fing PMI, which unexpectedly slipped into contraction. German Cll'r Merkel's reassurances that every German citizen will be offered a Covid-19 vaccine by the end of Sep failed to soothe the nerves, with Italian political drama taking focus.

• In the European evening, RTRS cited unnamed sources as noting that talks between leaders of Italy's former ruling coalition reached a deadlock over policy disagreements. RTRS sources said that the talks broke down even before party leaders discussed candidates for prime minister. The main sticking point was reportedly provided by ex-PM Renzi's demand to launch a major cabinet shake-up and replace current FinMin Gualtieri. Lower House Speaker Fico is due to report to Pres Mattarella about the progress in negotiations later today.
• EUR/JPY last deals at Y126.58, little changed on the day. A slide through the 20-EMA at Y126.29 would open up Jan 27 low of Y125.60. Conversely, gains past Jan 29 high of Y127.34 would expose Jan /Mar 1, 2019 highs of Y127.49/50.
• Coming up in the eurozone today we have advance Q4 GDP data for Italy & the whole bloc, flash French CPI & ECB's de Cos.