Market participants are on alert regarding how currency strength and weakness will shift amid the yen's upward trend

Market participants are on alert regarding how currency strength and weakness will shift amid the yen's upward trend

09.01.2023

Last weekend, the U.S. dollar became the weakest currency after the December U.S. employment report released on Friday, the 6th, showed that average hourly earnings fell below the previous month’s and the previous year’s figures, which was interpreted as a slowdown in wage inflation. The EUR/USD pair rose by approximately 160 pips from 1.0480 to 1.0647.The upward trend has continued into today’s Asian session, with the pair surpassing the highs of the past three days. Technically, the EUR/USD pair rebounded after the 200-period simple moving average (SMA) on the 4-hour chart acted as a support level, so it will be worth watching to see if the upward trend continues.

European currencies weakened slightly against the yen after the December Harmonized Index of Consumer Prices (HICP) fell from 10.1% to 9.2%. The euro/yen pair dropped by approximately 110 pips, from 141.451 to 140.230.Although the pair is currently trading just below the 200-day SMA on the daily chart, the ±3σ Bollinger Bands are trending downward, so caution is warranted regarding a potential continued decline.

Today, during Asian trading hours at 15:45, Switzerland’s unemployment rate will be released; during European trading hours at 16:00, Germany’s industrial production; at 16:45, France’s trade balance and current account balance; at 19:00, the Eurozone’s unemployment rate; at 20:00, Canada’s leading economic index; at 21:00, Mexico’s producer price index; and during U.S. trading hours at 22:30, Canada’s housing starts;at 12:30 AM UK time: remarks by PMC member Pill; at 2:30 AM: remarks by Bostic, President of the Atlanta Fed; and at 5:00 AM: U.S. consumer credit balances. We will be closely monitoring how currency strength dynamics shift, as the trend has reversed from yen weakness to yen strength.