JPY and EUR strengthen on monetary policy expectations

The USD weakened against its counterparts yesterday despite the acceleration of the PCE rates both at a headline and core level, implying a relative resilience of inflationary pressures in the US economy. Furthermore, the revised GDP rate for Q3 verified the growth of the US economy. We expect some easing of volatility in today’s American session as traders in the US may be gathering home for the Thanksgiving Holiday, thus thin trading conditions may apply.

Across the Atlantic the common currency got some support yesterday against the USD yet weakened against the GBP and JPY. On a monetary level, ECB board member Schnabel’s lonely dissenting voice was heard yesterday. She stated that she sees little room for further rate cuts highlighting that monetary policy easing may not be the answer to structural problems, while in a more optimistic note stated that the Euro Zone is not heading towards a recession. Overall, the statements forced the market to readjust its expectations for the rate-cutting intentions of the ECB supporting the common currency. Today we have a number of Eurozone-related financial data yet the main release may be Germany’s preliminary HICP for November and a possible acceleration could provide some support for the EUR.

EUR/USD rose yesterday breaking the 1.0530 (S1) resistance line, now turned to support. Given that the downward trendline guiding the pair since the 6 of November, has been broken we temporary switch our bearish outlook in favour of a sideways motion bias. Yet we note that the RSI indicator has risen, yet remains below the reading of 50, implying that some bearish tendencies are still present. Should the bears take over, we may see the pair breaking the 1.0530 (S1) support line, taking aim of the 1.0450 (S2) support level. Should the buying interest be extended and turn to a bullish outlook, we may see the pair aiming if not breaking the 1.0670 (R1) resistance base.

JPY also got some support yesterday against the USD, EUR and GBP in a sign of wider strength. BoJ’s intentions are still maybe the main key factor behind JPY’s movement and the markets continue to expect the bank to proceed with a rate hike in the December meeting. We see the case for the bank to actually proceed with another rate hike in its next meeting and a possible further enhancement of such market expectations could amplify further the support for the Yen. Tomorrow, we note the release of Tokyo’s CPI rates and a possible acceleration of the rates could create even more support for the JPY as it could foreshadow a resilience of inflationary pressures in Japanese economy as a whole.

USD/JPY dropped yesterday, yet was unable to clearly break the 151.35 (S1) support line, surfacing above it once again in today’s Asian session. It should be noted that the pair’s upward correction after the price action broke the lower Bollinger band possibly reaching oversold levels. We tend to maintain our bearish outlook and view the upward motion of the pair as a correction for the time being. Should the bears renew their control over the pair, we may see USD/JPY breaking the 151.35 (S1) support line, taking aim for the 149.40 (S2) support level. A bearish outlook currently seems remote as for its adoption the pair would have to rise, break initially the downward trendline guiding the pair since the 15 of November, signaling the interruption of the downward movement and continue higher to break also the 154.65 (R1) resistance level.

その他の注目材料

Today in the European session, we get Eurozone’s Business climate and economic sentiment. In the American session, we note the release of Canada’s current account balance for Q3. Also, we note that ECB’s Elderson and Lane are scheduled to speak. During tomorrow’s Asian session, we note the release of Japan’s and October’s preliminary industrial output.