Should we keep a close eye on the movements of cross-yen pairs, which appear to be entering a rebound phase following the yen’s appreciation?

Should we keep a close eye on the movements of cross-yen pairs, which appear to be entering a rebound phase following the yen’s appreciation?

25.12.2023

Last weekend, the U.S. dollar recovered slightly during U.S. trading hours after the release of U.S. November personal income data on Friday, the 22nd, which showed an increase to 0.4% from 0.2% the previous month, while personal spending remained unchanged at 0.2%.The EUR/USD pair, which had been rising toward 1.1040, plummeted to 1.0998, falling just below the 20-period moving average on the hourly chart. From a technical perspective, since the EUR/USD has risen to just below the +2σ level of the daily Bollinger Bands, traders should be wary of a sharp decline in the pair over the Christmas holiday.

European currencies saw the euro rebound slightly against the yen after Germany’s November import price index, released last weekend, showed a year-over-year improvement from the previous month’s -13.0% to -9.0%.The euro/yen pair rose from 156.134 to 156.994, returning to an upward trend on the 4-hour chart. Since the 200-day SMA is functioning as a solid support line on the daily chart as well, we will be watching closely to see if the euro will trend higher against the yen in the final week of 2023.

As for today’s economic indicators, aside from Japan’s Economic Sentiment Index scheduled for 14:00 and Taiwan’s Industrial Production data at 17:00, no major economic releases or statements from key figures are expected, as Europe and the U.S. are on Christmas break.Please note that markets in major European countries—including the UK, Switzerland, and Germany—will remain closed tomorrow as well. We should pay close attention to the movements of cross-yen pairs, which are currently rebounding from their recent yen-strength trend.