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

In the U.S. currency markets last weekend, the euro fell against the dollar following the release of strong U.S. employment data. The EUR/USD pair dropped 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—above its pre-employment-data level. This marks the highest level since June 28 of this year. It will be interesting to see if this upward trend continues.

European currencies saw the euro fall 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. While the Japanese yen had been showing 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, during European trading hours, Turkey’s Consumer Price Index and Producer Price Index will be released at 16:00, followed by France’s Services PMI at 17:50, Germany’s Services PMI at 17:55, the Eurozone’s Services PMI at 18:00, the UK’s Services PMI at 18:30,at 7:00 PM, Eurozone Retail Sales, and during U.S. trading hours at 10:30 PM, Canadian Housing Starts, at 11:45 PM, U.S. Services PMI, at 12:00 AM, U.S. Manufacturing Orders Index, and the U.S. ISM Non-Manufacturing PMI. We should remain vigilant regarding the trend of the weakening Japanese yen.