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Market Participants May Be Wary of Further Downside in the EUR/JPY Pair Amid a Strong Yen Trend

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Market Participants May Be Wary of Further Downside in the EUR/JPY Pair Amid a Trend Toward a Stronger Yen

04.08.2023

Today's Highlights
  1. Retail Sales in Europe
  2. Canada-Ivey Purchasing Managers' Index

In the U.S. currency market yesterday, the U.S. dollar traded in a tight range against the euro after the U.S. July Purchasing Managers’ Index (PMI), released yesterday, came in at 52.0, matching the previous month’s reading.The EUR/USD pair traded in a range between 1.0912 and 1.0961, showing a lack of clear direction.However, during today’s Asian trading session, a rebound has been observed, with the 20-period moving average (MA) on the hourly chart providing support on the downside, and the hourly RSI is beginning to trend upward. Therefore, we should remain cautious as to whether the U.S. dollar may weaken during European trading hours.

European currencies fell against the yen after the European Union’s June Producer Price Index (PPI), released yesterday, showed a year-over-year decline that worsened from the previous month’s -1.5% to -3.4%.The euro/yen pair fell from 157.211 to 155.545. On the daily chart, the price is beginning to form a triple top pattern. We will monitor the situation closely, considering today’s retail sales data, to see if the euro continues to weaken against the yen into the U.S. trading session.

Today’s schedule includes German manufacturing orders at 15:00 Asia time, Hungarian industrial production at 15:30, French industrial production and the French manufacturing production index at 15:45, followed by Thailand’s foreign exchange reserves at 16:30 Europe time, UKConstruction PMI, at 18:00 during European trading hours, European retail sales, at 20:15, remarks by MPC member Pill from the UK, at 21:30 during U.S. trading hours, Canadian employment statistics and U.S. employment statistics, and at 23:00, the Canadian Ivey Purchasing Managers’ Index.We should remain highly vigilant regarding the downside potential for the EUR/JPY pair, which has been trending toward a stronger yen.

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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