The Eurodollar remained range-bound against the yen following the release of weak economic data from both Europe and Japan. While the Japanese consumer confidence missed estimates for April, the German retail sales unexpectedly declined in March. Overall, the EUR/JPY pair remained range-bound between 136.55 and 137.63 in the last 24 hours.
According to the Japanese Cabinet Office, the country’s consumer confidence index inched higher to 33 in April, from a 14-month low of 32.80 in the prior month, but missed the reading of 34.90 anticipated by economists. The reported reading reflects the first increase in six months.
The feeble improvement in the consumer confidence index was primarily aided by a 1.30 points rise in the employment perception index to 36.10. In the meanwhile, the income growth expectations index fell 0.60 points to 36.80 in April. Also, the overall likelihood fell by 0.10 points to 31.20. Finally, the inclination to purchase durable goods dipped 0.10 points to 27.70.
As per the data published by the German Statistical agency Destatis, the country’s retail sales fell by 0.10% m-o-m in March, following a 0.10% increase in the prior month, and missed the 0.20% growth anticipated by economists.
On a y-o-y basis, German retail sales declined 2.70% in March 2022.
The S&P Global Italy Manufacturing Purchasing Managers’ Index (PMI) declined to 54.50 in April, from 55.80 in the earlier month and missed the reading of 55.10 anticipated by economists. The reported reading reflects the lowest level since December 2020, hinting at an overall loss of momentum. A reading above 50 indicates expansion and vice-versa. Therefore, the reading also mirrors the 22nd successive month of expansion.
Manufacturing output growth recorded the weakest level since June 2020 against the backdrop of logistics issues and material scarcity. In the meantime, average supply times increased for the 28th successive month.
According to the data published by the S&P Global / BME, the German Manufacturing PMI fell to a 20-month low of 54.60 in April, from 56.90 in the prior month. The initial estimates pegged the manufacturing PMI at 54.10. Economists did not anticipate any change in the initial estimates.
Production contracted for the first time since June 2020 against the backdrop of a drop in demand and scarcity of raw materials. The fall in fresh orders was the first since mid-2020, primarily due to a downturn in export sales caused by the Russia-Ukraine conflict, sanctions on Russia, and reinforcement of prohibitions in China to prevent the spread of COVID-19 infections.
The S&P Global Eurozone Manufacturing PMI decreased to a 15-month low of 55.50 in April, from 56.50 in March, but slightly better than the initial estimates of 55.30. Economists did not anticipate any change in the preliminary estimates. The reported figure reflects the weakest pace of growth in 22-months.
Also, the Eurozone final manufacturing output index declined to a 22-month low of 50.70 in April, from 53.10 in March. Input price inflation rose to a five-month high against the backdrop of a sharp rise in fuel and energy costs.
According to the data published by the Italian National Institute of Statistics, the country’s unemployment rate dipped to 8.30% in March, from 8.50% in February and a notch lower than the 8.40% unemployment rate anticipated by economists.
The weak economic data from Europe, the Ukraine-Russia conflict, and the shutdown of gas supply to Poland and Bulgaria are expected to keep the Eurodollar slightly bearish against the yen in the short term.
The historical price chart indicates that the EUR/JPY pair is rising after testing the support at 136.50 levels. The next minor resistance is anticipated only near 137.98. Additionally, the stochastics indicator is in the bearish zone. Therefore, we are anticipating the currency pair to remain in an uptrend in the near term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
