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Should We Be Wary of the Euro's Continued Decline, Given Its Limited Upside Potential?

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Should We Be Wary of the Euro's Continued Decline, Given Its Limited Upside Potential?

05.08.2025

Today's Highlights
  1. UK Non-Manufacturing PMI
  2. U.S. ISM Non-Manufacturing Purchasing Managers' Index

In the U.S. currency market the previous day, the Canadian dollar continued to fall against the yen. The CAD/JPY pair dropped from 107.426 to 106.581.A pullback occurred upon touching the 20-period moving average (MA) on the hourly chart. On the 4-hour chart, the pair is in the process of breaking below the 200-period simple moving average (SMA) that had been providing support, and on the daily chart, it is on the verge of breaking through the support line formed by the 200-period SMA. We will be watching closely to see if today’s economic data releases during U.S. trading hours will cause the Canadian dollar to hit a new low.

Among European currencies, the euro weakened, following the Swiss franc. The euro/yen pair fell from 171.156 to 169.909. The downtrend along the 20-period moving average (MA) on the hourly chart continued.On the 4-hour chart, the pair has already broken below the support line formed by the 200-period simple moving average (SMA), and on the daily chart, it is falling at a pace that threatens to reach last month’s low. We will be watching closely to see if the euro recovers following today’s economic data releases during European trading hours.

Today, the minutes of the Bank of Japan (BOJ) meeting will be released at 8:50; at 15:45, France’s industrial production and manufacturing production index will be released; at 16:50, France’s non-manufacturing PMI will be released;at 16:55, Germany’s Non-Manufacturing PMI; at 17:00, the Eurozone’s Non-Manufacturing PMI; at 17:30, the UK’s Non-Manufacturing PMI; at 18:00, the Eurozone’s Producer Price Index; at 21:30, Canada’s Trade Balance and the U.S. Trade Balance;22:45: U.S. Non-Manufacturing PMI; 23:00: U.S. ISM Non-Manufacturing Index; 26:00: U.S. 3-Year Treasury Auction; and 7:45 the following day: NZQ2 Unemployment Rate. We should remain cautious about the possibility of further declines in the euro, as its upside is limited.

桜井 慶介

Author: Keisuke Sakurai

He has over 10 years of experience in FX trading. In the financial sector, he has been involved in investment management focused primarily on foreign exchange markets and has experience as an asset management advisor. Drawing on his extensive experience, he specializes in technical and fundamental analysis.

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Should We Keep an Eye on the Euro’s Upside Potential as It Strengthens Alongside the Japanese Yen?

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