Should We Be Wary of the Yen’s Unrelenting Decline?
13.05.2022
- France: Consumer Price Index
- Mester (U.S.): Remarks by the President of the Cleveland Federal Reserve Bank
On the previous day, U.S. currencies traded firmly against all currencies except the yen, with the euro/dollar pair falling by about 170 pips from 1.052 to 1.035.From a technical perspective, the EUR/USD pair began its decline after encountering resistance at the 20-period moving average (MA) on the 4-hour chart. In addition to setting a new low for the year, it has fallen to the level of the December 2016 low. Although a temporary rebound may occur, we should remain cautious as the pair could resume its downward trend.
Among European currencies, the euro fell against the yen, with the EUR/JPY pair dropping more than 400 pips from 136.74 to 132.65. The chart pattern suggests that the long-term trend of yen weakness may have come to a temporary halt.We will be watching closely to see if the EUR/JPY pair extends its decline toward the 200-day SMA at around 131.00.
Today’s schedule includes the French Consumer Price Index at 15:45 European time, Turkey’s Industrial Production at 16:00, and the Eurozone’s Industrial Production at 18:00; followed by the U.S. Import Price Index at 21:30 U.S. time and the University of Michigan Consumer Sentiment Index(flash estimate), at 24:00 remarks by German Bundesbank President Nagel and U.S. Federal Reserve Bank of Minneapolis President Kashkari, and at 25:00 remarks by U.S. Federal Reserve Bank of Cleveland President Mester.We intend to carefully monitor how currency strength and weakness evolve heading into the weekend.
Author: Keisuke Sakurai
