Should we be wary of the yen’s unstoppable decline?
13.05.2022
- France: Consumer Price Index
- Mester (U.S.): Remarks by the President of the Cleveland Federal Reserve Bank
U.S. currencies traded firmly against most currencies other than the yen yesterday, with the euro/dollar falling by about 170 pips from 1.052 to 1.035.Technically, 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 simple moving average (SMA) at around 131.00.
Today’s schedule includes the French Consumer Price Index at 15:45 (European time), Turkish Industrial Production at 16:00, and Eurozone Industrial Production at 18:00; followed by the U.S. Import Price Index at 21:30 (U.S. time), the University of Michigan Consumer Sentiment Index (Preliminary) at 23:00,at 12:00 a.m., remarks by German Bundesbank President Nagel and U.S. Federal Reserve Bank of Minneapolis President Kashkari, and at 1:00 a.m., remarks by U.S. Federal Reserve Bank of Cleveland President Mester. I intend to carefully monitor how currency strength and weakness evolve heading into the weekend.
Author: Keisuke Sakurai
