Should We Be Wary of the Japanese Yen's Weakening Trend?

Should We Be Wary of the Japanese Yen's Weakening Trend?

05.12.2022

Last weekend, the euro fell against the U.S. dollar following the release of strong U.S. employment data.The EUR/USD pair fell by approximately 110 pips, from 1.0540 to 1.0427. However, the downward momentum did not persist, and during today’s Asian trading session, the pair rose to 1.0584, surpassing its pre-employment report level. This marks a high not seen since June 28 of this year. It will be interesting to see if this upward trend continues.

European currencies fell against the yen after the EU’s October Producer Price Index (PPI), released last Friday, came in below market expectations on a year-over-year basis. The euro/yen pair dropped to 140.763, hitting a two-month low.Although the Japanese yen had been showing signs of strength, the euro/yen pair rebounded as the yen became the weakest currency at the start of the week. It has since recovered to 142.389. As the pair is currently trading just below the 20-period moving average (MA) on the 4-hour chart, we will be watching closely to see if this momentum-driven rebound continues.

Today, at 16:00 European time, Turkey’s Consumer Price Index and Producer Price Index will be released; at 17:50, France’s Services PMI; at 17:55, Germany’s Services PMI; at 18:00, the Eurozone’s Services PMI; and at 18:30, the UK’sServices PMI, at 19:00 the Eurozone Retail Sales, and during U.S. trading hours at 22:30 the Canadian Housing Starts, at 23:45 the U.S. Services PMI, at 24:00 the U.S. Manufacturing Orders Index, and the U.S. ISM Non-Manufacturing Index are scheduled to be released.We should remain vigilant regarding the trend of the weakening Japanese yen.