Will the downward trend in European currencies continue?

Will the downward trend in European currencies continue?

01.11.2021

Last weekend, the three major U.S. stock indices all rose, resulting in a market environment characterized by rising stock prices, falling interest rates, and stable crude oil prices. The U.S. September PCE deflator, released over the weekend, came in at 4.4%, in line with market expectations, marking the highest rate in 30 years. Although concerns about inflation have not been dispelled, their impact on the market was limited.

With no significant gaps opening in the foreign exchange market, cross-yen pairs have been trading sideways during today’s Asian session. European currencies, in particular, have been weak, with the euro/yen falling from 132.93 to 131.61. From a technical perspective, the euro/yen has found support at the 20-day moving average (MA) over the past three days, halting its decline. We need to carefully assess whether it can hold the 20-day MA support around 131.57.

Today’s economic indicators include German retail sales at 4:00 PM, Hong Kong’s third-quarter real GDP at 5:30 PM,the Swiss SVME Purchasing Managers' Index at 5:30 PM, German Manufacturing PMI at 5:55 PM, Eurozone Manufacturing PMI at 6:00 PM, UK Manufacturing PMI at 6:30 PM, Canadian Leading Economic Index at 9:30 PM, and the US ISM Manufacturing Index and US Construction Spending at 11:00 PM.This week is packed with events, starting with the U.S. FOMC meeting on Wednesday the 3rd, followed by policy rate announcements from Australia and the UK, and ending with the U.S. jobs report on Friday the 5th. We will need to pay close attention to these economic indicators while assessing currency strength and weakness.