Investors may be wary of further downside potential for the euro, which is falling on the back of weak economic indicators

Investors may be wary of further downside potential for the euro, which is falling on the back of weak economic indicators

08.02.2023

In the previous day’s U.S. currency markets, the U.S. dollar was the weakest currency despite comments from Fed Chair Powell regarding further rate hikes.The EUR/USD pair rebounded by just over 90 pips, rising from 1.0669 to 1.0765. It recovered the ground lost after deviating downward from the 200-period SMA on the 4-hour chart. However, on the daily chart, the EUR/USD has been in a downtrend since the RSI touched 70, so we need to carefully assess whether this rebound will continue.

European currencies fell sharply against the yen after Germany’s December industrial production, released yesterday, came in at -3.1%, significantly worse than the market forecast of -1.9%.The EUR/JPY pair fell by about 2 yen, from 142.327 to 140.285, and broke below the 20-period moving average on the 4-hour chart. Technically, since the ±3σ lines of the daily Bollinger Bands are pointing downward, we should remain cautious about a continued decline.

Today’s schedule includes the U.S. MBA Mortgage Applications Index at 9:00 PM, remarks by U.S. Federal Reserve Bank of New York President Williams at 11:15 PM, remarks by U.S. Federal Reserve Governor Cook at 11:30 PM, U.S. Wholesale Inventories at 12:00 AM,remarks by US Federal Reserve Vice Chair Bar, remarks by US Atlanta Fed President Bostic, US weekly crude oil inventories at 12:30 a.m., remarks by US Minneapolis Fed President Kashkari at 2:30 a.m., a US 10-year Treasury auction at 3:00 a.m., and remarks by US Federal Reserve Governor Waller at 3:45 a.m.We should remain cautious about the downside potential for the euro, which is falling due to weak economic indicators.