- The EUR/JPY extends the 200-day SMA’s rejection drop from this week and draws in more sellers.
- The JPY is strengthened and the cross is somewhat pressured by strong wage growth statistics from Japan.
- The Euro is still being weakened and the current decline is exacerbated by the ECB’s dovish stance.
The EUR/JPY cross slips to a three-day bottom, around the 162.60 region, during Thursday’s Asian session after experiencing some fresh selling pressure after two-way, directionless price movements the day before.
In response to government data that revealed Japan’s base salary, or regular pay, increased 2.7% in November—the fastest gain since 1992—the Japanese yen (JPY) strengthened overall. According to the report’s further details, the inflation rate used by the ministry to calculate wages increased from 2.6% in October to 3.4% from the previous year. This strengthens the case for the Bank of Japan (BoJ) to raise interest rates once more, which influences the EUR/JPY cross and gives the JPY a slight boost.
Other reasons that contribute to the JPY’s relative safe-haven status include the cautious market sentiment, ongoing geopolitical worries, and trade war fears. On the other hand, dismal German data announced on Wednesday weakens the common currency. In reality, the Federal Statistics Office announced that Germany’s Factory Orders unexpectedly plummeted in November, by 5.4% MoM in November compared to the 1.5% decline in the previous month. Additionally, in November, German retail sales fell 0.6% month over month.
The data confirms the European Central Bank’s (ECB) dovish stance and heightens worries about the struggling Eurozone economy. This depresses the euro and puts more pressure on the EUR/JPY cross, especially when combined with the underlying bullish sentiment surrounding the US dollar (USD). The recent, recurrent failure to break through the 200-day SMA key resistance, even from a technical standpoint, supports bearish trades and indicates that the path of least resistance for spot prices is downward.
Japanese Yen PRICE Today
The Japanese Yen’s (JPY) percentage move against the main listed currencies today is displayed in the table below. When compared to the Australian dollar, the Japanese yen was the strongest.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.07% | 0.23% | -0.30% | -0.04% | 0.28% | 0.21% | -0.04% | |
| EUR | -0.07% | 0.16% | -0.34% | -0.10% | 0.22% | 0.14% | -0.12% | |
| GBP | -0.23% | -0.16% | -0.53% | -0.26% | 0.06% | -0.01% | -0.25% | |
| JPY | 0.30% | 0.34% | 0.53% | 0.23% | 0.56% | 0.44% | 0.24% | |
| CAD | 0.04% | 0.10% | 0.26% | -0.23% | 0.33% | 0.24% | -0.01% | |
| AUD | -0.28% | -0.22% | -0.06% | -0.56% | -0.33% | -0.08% | -0.31% | |
| NZD | -0.21% | -0.14% | 0.01% | -0.44% | -0.24% | 0.08% | -0.23% | |
| CHF | 0.04% | 0.12% | 0.25% | -0.24% | 0.01% | 0.31% | 0.23% |
Before the release of Eurozone Retail Sales data, EUR/USD is down around 1.0300.
In the European session on Thursday, the EUR/USD exchange rate is trading at about 1.0300 with slight losses for the third day in a row. In the face of persistent demand for US dollars, encouraging German industrial production data for November does not help the euro. Next up is Fedspeak and Eurozone Retail Sales.
The Relative Strength Index (RSI) indicator on the 4-hour chart declined below 40, reflecting a buildup in bearish momentum. On the downside, 1.0240 (end-point of the latest downtrend) aligns as the next support before 1.0200 (round level, static level).
In case EUR/USD manages to stabilize above 1.0320 (Fibonacci 23.6% retracement of the latest downtrend), 1.0350 (20-period Simple Moving Average (SMA), 50-period SMA) and 1.0375 (Fibonacci 38.2% retracement) could be seen as next resistance levels.
Fundamental Overview
| GMT | Event | Actual | Consensus | Previous | |
|---|---|---|---|---|---|
| Thursday, Jan 09 | |||||
| 09:00 | EUR Saxony CPI (YoY) | 3.2% | 2.9% | ||
| 09:00 | EUR Bavaria CPI (MoM) | 0.5% | -0.2% | ||
| 09:00 | EUR Brandenburg CPI (YoY) | 2.4% | 1.9% | ||
| 09:40 | EUR 3-y Bond Auction | 2.277% | |||
| 10:00 | EUR Retail Sales (MoM) | 0.4% | -0.5% | ||
| 10:00 | EUR Retail Sales (YoY) | 1.9% | |||
| 10:00 | EUR 10-y Bond Auction | 3.24% | |||
| 11:00 | EUR Global Trade Balance | €-7.601B | |||
| 12:30 | USD Challenger Job Cuts | 57.727K | |||
| 14:00 | USD Fed’s Harker speech | ||||
After ending the second straight day in negative territory on Wednesday, EUR/USD is on the defensive and trades just below 1.0300 in the European morning on Thursday. The pair finds it challenging to mount a recovery due to the risk-averse market environment, and the technical outlook indicates that the negative bias is still present.
As worries about US President-elect Donald Trump enacting a harsh tariff policy grew, the USD benefited from safe-haven flows. CNN said Wednesday that Trump is thinking of announcing a national economic emergency to enable a new tariff program, citing four people with knowledge of the situation.
As part of a nationwide day of mourning for the passing of former President Jimmy Carter, US stock and bond markets will stay closed and close early on Thursday.
A number of Federal Reserve (Fed) policymakers will be giving talks in the second half of the day. The USD is expected to maintain its strength if policymakers stress the need for a halt in policy easing in light of the uncertainty around the effect of tariffs on the inflation outlook. The December jobs report from the US Bureau of Labor Statistics, which includes data on nonfarm payrolls and the unemployment rate, will be released on Friday.
Meanwhile, as the UK gilt selloff continues, Pound Sterling (GBP) is still under a lot of selling pressure. After climbing 0.7% on Wednesday, the EUR/GBP cross is up more than 0.5% today, indicating that the Euro can absorb some of the capital flight from the GBP. The downside of EUR/USD may be constrained if EUR/GBP keeps rising.
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