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Should We Be Wary of Further Downside Potential in the Euro/Yen Pair, Where a Divergence Is Occurring?

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Should We Be Wary of Further Downside Potential in the EUR/JPY Pair, Where a Divergence Is Occurring?

20.02.2023

Today's Highlights
  1. European Consumer Price Index
  2. Remarks by BOE Deputy Governor Woods

Last weekend, the U.S. dollar traded in a tight range against the euro, with the EUR/USD pair fluctuating between 1.0612 and 1.0698.The EUR/USD pair has reached the upper boundary of its 4-hour downtrend and is now approaching the daily 10-day moving average (MA) above it. On the other hand, the daily 75-day MA has acted as a support level, triggering a rebound; therefore, it will be worth watching to see if the EUR/USD pair will rise this week.

European currencies faced upward pressure on the euro after Germany’s January Producer Price Index (PPI), released last Friday, came in at 17.8% year-over-year, down from 21.6% the previous month.The EUR/JPY pair traded in a range between 143.021 and 143.674, with the RSI showing divergence on the 4-hour chart. On the weekly chart, the EUR/JPY is beginning to take on the appearance of a triple top pattern, so traders should be wary of a decline during European trading hours.

Today, at 16:00 European time, Sweden’s Consumer Price Index and Turkey’s Consumer Confidence Index will be released; at 17:20, Taiwan’s fourth-quarter current account balance; at 18:00, the Philippines’ Industrial Production and Producer Price Index; and at 19:00, the Eurozone’sconstruction output, and during U.S. trading hours at 23:00, Israel’s benchmark interest rate; at 24:00, the Eurozone Consumer Price Index; and at 28:00, remarks by BOE Deputy Governor Woods. We should remain cautious about the downside potential in the EUR/JPY pair, where divergence is occurring.

桜井 慶介

Author: Keisuke Sakurai

He has over 10 years of experience in FX trading. In the financial sector, he has been involved in investment management focused primarily on foreign exchange markets and has experience as an asset management advisor. Drawing on his extensive experience, he specializes in technical and fundamental analysis.

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