With the ECB meeting just two days away, investors may be wary of how much further the euro could fall

With the ECB meeting just two days away, investors may be wary of further downside potential for the euro

25.07.2023

In yesterday’s U.S. trading session, the U.S. dollar fell against the yen after the U.S. July PMI (Purchasing Managers’ Index) was released during U.S. trading hours, showing a decline from 53.2 in the previous month to 52.0. The USD/JPY pair fell from 141.813 to 140.740.Although the pair had been trading above the 20-period moving average (MA) on the hourly chart, the decline caused it to fall below the 20-MA. However, as we are seeing an upward move during today’s Asian session, we will wait and see how the market moves during U.S. trading hours.

European currencies saw the euro fall sharply against the yen after yesterday’s release of the July Eurozone PMI showed declines in both the services and manufacturing sectors compared to the previous month. The euro/yen pair fell from 157.778 to 157.245, breaking well below the 20-period moving average on the 4-hour chart. As the euro/yen remains below the 20-period moving average during today’s Asian trading session, we will be watching closely to see if the euro continues to weaken ahead of the ECB meeting scheduled for the day after tomorrow.

Today, during Asian trading hours, the Norwegian Mining Confidence Index will be released at 14:00, followed by the Swedish Producer Price Index at 15:00. During European trading hours, the Turkish Economic Sentiment Index and Turkish Capacity Utilization Rate will be released at 16:00, followed by the German IFO Business Climate Index and the Philippine Unemployment Rate at 17:00, and the UKCBI Business Survey, at 22:00 US time the US S&P/Case-Shiller Home Price Index and at 23:00 the US Consumer Confidence Index, and a US 5-year Treasury auction. With the ECB meeting just two days away, we should remain cautious about the downside potential for the euro, which is currently falling.