Should We Be Wary of the Direction of Cross-Yen Pairs, Given the Pronounced Trend Toward Yen Selling?
06.12.2022
- Canada: Trade Balance
- Canada-Ivey Purchasing Managers' Index
In the U.S. currency market yesterday, the U.S. dollar emerged as the strongest currency after the U.S. November ISM Non-Manufacturing Purchasing Managers’ Index, released yesterday, came in at 56.5, exceeding the market forecast of 53.4.The EUR/USD pair fell by approximately 110 pips from 1.0594 to 1.0481. This decline followed the pair’s rise to a five-month high. Since the EUR/USD has firmly broken above the 200-day SMA on the daily chart, we should watch for a corrective pullback over the coming days.
Among European currencies, the euro rose sharply against the yen. It climbed approximately 2.1 yen, from 141.430 to 143.606. After consolidating just above the 200-period SMA on the hourly chart, the euro/yen broke above it without pulling back, touching 143.919.It then rebounded up to the 75-period moving average on the 4-hour chart. Since the EUR/JPY is currently rising from the lower boundary to the upper boundary of a downtrend line, it will be important to monitor whether the rebound continues up to the upper boundary of the trend line, around 145 yen.
Today, during European trading hours, German manufacturing orders will be released at 16:00, the Norwegian Regional Network Survey at 18:00, the UK Construction PMI and South Africa’s third-quarter GDP at 18:30, and at 21:00, New Zealand’sdairy prices, and Mexico’s total fixed capital formation; during U.S. trading hours, the U.S. trade balance and Canada’s trade balance are scheduled for 22:30, and Canada’s Ivey PMI is set for 24:00. We should remain cautious about the direction of cross-yen pairs, where the trend of yen selling is particularly pronounced.
Author: Keisuke Sakurai
