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 previous day’s U.S. currency trading, the U.S. dollar weakened toward the end of the U.S. trading session—contrary to rising U.S. Treasury yields—weighing on the upside for USD/JPY. While other yen crosses, such as EUR/JPY and GBP/JPY, formed an uptrend, USD/JPY was limited to a modest rise from the high 149-yen range to the 150-yen level, hovering around the 20-period moving average (MA) on the hourly chart.From a technical perspective, while USD/JPY has entered a rebound phase off 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 month’s high.

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

Today’s schedule includes South Africa’s foreign exchange reserves at 3:00 PM, Switzerland’s employment statistics at 3:45 PM, the UK’s Halifax house prices and Germany’s industrial production at 4:00 PM, Switzerland’s foreign exchange reserves at 5:00 PM, the Eurozone’s producer price index at 7:00 PM, and at 9:30 PM, Kashkari:Minneapolis Fed President Kashkari’s remarks, Canada’s trade balance and the U.S. trade balance at 10:30 PM, the Redbook large-scale retail sales report at 10:55 PM, remarks by Fed Governor Barr at 11:15 PM, Turkey’s Ministry of Finance cash balance at 11:30 PM, and U.S. consumer credit data at 1:00 AM.In terms of currency strength, we will cautiously monitor the upside potential of the firm European currencies.