As the US dollar continues to weaken against the yen and franc this morning, it has gained against other major currencies. The euro, particularly the EUR/JPY pair, has suffered a significant decline over the past two days due to disappointing eurozone PMI data. On the other hand, the yen is on a rally as Japanese bond yields rise while those in the US and Eurozone fall.
Market watchers are now eagerly awaiting the upcoming Bank of Japan meeting, with speculation mounting about a potential ten-basis point rate hike. The yen’s recovery contrasts sharply with the euro’s struggle this week, as poor data continues to weaken the EUR/JPY pair.
Attention in the FX space will now turn to upcoming economic calendar data, as investors brace for further market shifts.
Eurozone’s Recovery Falters on Weak PMI Data
Recent PMI data suggests that the eurozone’s economic recovery is losing momentum, with the composite PMI falling to 50.1 in July from 50.8 in June. Manufacturing and services PMIs have also shown signs of weakness, posing challenges for the region’s growth outlook.
Eurozone Growth Outlook Darkens as Yen Strengthens Amid Rising Yields
While the eurozone’s growth outlook faces downward risks, the yen continues to strengthen driven by rising Japanese yields. The narrowing bond yield spread between Japan and other economies has propelled the yen’s recovery, with attention now focused on the Bank of Japan’s upcoming meeting and potential rate hike speculations.
USD Mixed Ahead of Key US Data
The US dollar remains mixed, weakening against some currencies while strengthening against others. Market expectations of a rate cut in September remain high, with upcoming economic data playing a crucial role in shaping further rate decisions.
US Presidential Race Adds Uncertainty
The US presidential race adds another layer of uncertainty to the markets, impacting the dollar’s trajectory. The competition between Harris and Trump is expected to influence market sentiment, with the Federal Reserve’s interest rate decisions remaining a key driver for the dollar.
EUR/JPY Technical Analysis and Trade Ideas
The yen’s resurgence has led to a bearish trajectory for the EUR/JPY pair, with key support levels breaking. Traders should watch for potential support and resistance levels to gauge future price movements.
Analysis: The current global economic landscape is witnessing significant shifts in currency trends, with the euro weakening and the yen strengthening. Investors should closely monitor upcoming economic data and central bank decisions to navigate these market dynamics and make informed investment decisions.
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