Market participants may be wary of further downside potential for the euro, which has already weakened following remarks by ECB President Lagarde

Market participants may be wary of further downside potential for the euro, which has already weakened following remarks by ECB President Lagarde

22.11.2023

In yesterday’s U.S. trading session, the Canadian dollar rebounded against the yen after Canada’s October Consumer Price Index (CPI), released yesterday, showed a year-over-year decline of 0.7 percentage points from the previous month’s 3.8% to 3.1%. The CAD/JPY pair rose from 107.238 to 108.428, breaking above the 20-period moving average (MA) on the hourly chart with a bullish candle.From a technical perspective, the CAD/JPY pair has formed a bullish candle with a lower wick just below the daily 75-day moving average (MA). On the weekly chart, it has formed a bearish candle with a lower wick after falling below the 20-day MA. Therefore, we will be watching for strength in the Canadian dollar during U.S. trading hours.

Despite European Central Bank President Lagarde stating that “it is still too early to declare victory in the fight against inflation” and emphasizing the need to monitor developments closely, the euro weakened against the U.S. dollar. The EUR/USD pair fell from 1.0965 to 1.0899, halting just below the 20-period moving average on the 4-hour chart.The EUR/USD pair has continued its rebound since the start of the month, and as there is a possibility of a correction, we will be watching closely for directional cues during European trading hours.

Today’s schedule includes the Turkish Consumer Confidence Index at 4:00 PM, the South African Consumer Price Index at 5:00 PM, remarks by RBA Governor Block at 5:35 PM, the UK CBI Business Survey at 8:00 PM, the US MBA Mortgage Applications Index at 9:00 PM, US Initial Jobless Claims and US Durable Goods Orders at 10:30 PM,at 12:00 AM the US University of Michigan Consumer Sentiment Index, at 12:30 AM US weekly crude oil inventories, at 1:00 AM remarks by German Bundesbank President Nagel, at 1:30 AM remarks by Bank of Canada Governor McClem, and at 2:00 AM US weekly natural gas inventories. We should remain cautious about the downside potential for the euro, which has weakened following President Lagarde’s remarks.