Should we wait and see if the weakening of the U.S. dollar—which is accelerating due to the decline in the U.S. PPI—will continue?

Should we wait and see if the weakening of the U.S. dollar—which is accelerating due to the decline in the U.S. PPI—will continue?

14.07.2023

In U.S. currency trading the previous day, the U.S. dollar fell against the yen after the U.S. June Producer Price Index (PPI), released yesterday, showed a year-over-year decline from 1.1% to 0.1%. The USD/JPY pair fell by about 1 yen, from 138.933 to 137.910.The decline continued during today’s Asian trading session, with the pair touching 137.275. From a technical perspective, USD/JPY has shown a slight rebound after touching the weekly 200-day SMA, so we will be watching closely to see if the upward momentum strengthens during European trading hours.

Despite the fact that Europe’s May industrial production, released yesterday, fell from 0.2% to -2.2% year-over-year, the euro rose against the yen.The euro/yen pair rebounded from 153.881 to 155.125, rising to just below the daily 20-day moving average (MA). During the early part of today’s Asian trading session, the pair faced resistance at the daily 20-day MA, but it has been recovering in the latter half of the session. It will be worth watching to see if a trend toward a weaker yen resumes during U.S. trading hours.

Today’s economic indicators include Norway’s trade balance at 15:00, Switzerland’s producer import prices at 15:30, Turkey’s home sales at 16:00, the Philippines’ consumer price index at 17:00, and the Eurozone’strade balance at 17:00, Brazil’s retail sales at 21:00, Canada’s manufacturing shipments and the U.S. import price index at 21:30, Canada’s existing home sales at 22:00, and the U.S. University of Michigan Consumer Sentiment Index (preliminary) at 23:00.We will be closely monitoring price movements over the weekend to see if the US dollar’s decline—which has accelerated due to the drop in the US PPI—will continue.