With regard to currency strength, should we keep an eye on the upside potential of European currencies, which remain firm?

With regard to currency strength, should we keep an eye on the upside potential of European currencies, which remain firm?

07.11.2023

In the U.S. currency market the previous day, the U.S. dollar weakened toward the end of the U.S. trading session—contrary to the rise in U.S. Treasury yields—and the USD/JPY pair faced resistance at higher levels.While other yen crosses, such as the euro/yen and pound/yen, formed an uptrend, USD/JPY was limited to a modest rise from the high 149-yen range—just above the 20-period moving average (MA) on the hourly chart—to the 150-yen range.From a technical perspective, while USD/JPY has entered a rebound phase from the 200-period EMA on the 4-hour chart, it remains below the 20-period MA (base line) on the daily chart, so caution is warranted regarding resistance at the beginning of the month.

European currencies rose against the yen as the final reading of the Eurozone’s October Services PMI, released yesterday, remained unchanged from the previous month at 47.8.The euro/yen pair rose from 159.959 to 160.981, slightly surpassing this year’s high. The pair is following a clean uptrend along the 10-period moving average on the hourly chart, and since it has not experienced a significant pullback during today’s Asian session, we will be watching for further upside potential during the European session.

Today’s schedule includes South Africa’s foreign exchange reserves at 15:00, Switzerland’s employment statistics at 15:45, the UK’s Halifax house prices and Germany’s industrial production at 16:00, Switzerland’s foreign exchange reserves at 17:00,at 19:00, the Eurozone Producer Price Index; at 21:30, remarks by Kashkari, President of the Minneapolis Fed; at 22:30, Canada’s trade balance and the U.S. trade balance;at 22:55: U.S. Redbook Large Retailer Sales; at 23:15: Remarks by Fed Governor Bar; at 23:30: Turkey’s Ministry of Finance Cash Balances; and at 29:00: U.S. Consumer Credit Balances.In terms of currency strength, we will cautiously monitor the upside potential of the firm European currencies.