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, with the euro gaining 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 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, South Africa’s foreign exchange reserves will be released at 3:00 p.m., followed by Switzerland’s employment statistics at 3:45 p.m., the UK’s Halifax house prices and Germany’s industrial production at 4:00 p.m., Switzerland’s foreign exchange reserves at 5:00 p.m.,7:00 PM: Eurozone Producer Price Index; 9:30 PM: U.S. remarks by Kashkari, President of the Minneapolis Fed; 10:30 PM: Canada’s trade balance and U.S. trade balance;at 22:55: U.S. Redbook Large Retailer Sales; at 23:15: Remarks by Federal Reserve 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.