The euro rallied against the yen yesterday following reports of a second consecutive monthly decline in core machinery orders in March. The Eurozone consumer confidence data for May was almost in line with the market’s expectations. This enabled the euro to gain ground against the yen. There were no other major economic releases yesterday. Overall, the EUR/JPY pair rallied from a low of 148.85 to a high of 149.92 in the past 24 hours.
According to Japan’s Cabinet Office, the country’s core machinery orders, which act as a gauge of capital expenditure in the forthcoming six to nine months, declined 3.90% m-o-m in March following a decrease of 4.50% in the previous month and disappointed economists who were expecting a 0.70% growth.
On a y-o-y basis, core machinery orders, which exclude volatile goods related to shipping and the power sector, declined 3.50% in March 2023, missing forecasts of a 1.40% increase. In February, private-sector machinery orders surged 9.80% on a y-o-y basis.
Also, manufacturers polled by the Cabinet Office of the third largest economy are forecasting core orders to increase by 4.60% in the April-June period, following a 2.60% rise in the earlier quarter.
The Eurozone consumer confidence indicator inched up 0.10 points to -17.40 in May, hitting a fresh high since February last year. The preliminary estimates pegged the reading at -16.80. Economists did not anticipate any change in the preliminary estimates.
Overall, as per Eurostat, consumer sentiment in the European Union rose by 0.60 points to -18.30. However, confidence stood well below its long-term average.
The financial markets are expected to remain volatile until the US debt ceiling issue is resolved. During the weekend, US Treasury Secretary Janet Yellen stated that tough choices have to be made in case the debt ceiling talks fail. She also cautioned investors that the US could default on its debt by June 1st if the talks do not result in raising the debt ceiling. Trading with strict stop losses is advised after careful analysis of the trend.
The historical price chart indicates that the EUR/JPY pair is ascending after testing support at 148.65. The next resistance is anticipated only near 151.60. Additionally, the currency pair is trading above its 50-day moving average while the MACD indicator is showing a positive reading. Therefore, we anticipate the EUR/JPY pair to remain in an uptrend in the days ahead.
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.
