The euro remained rangebound against the yen yesterday following the release of weak economic data from both Japan and Italy. While Japan’s producer price index data for May missed estimates, Italy’s industrial production unexpectedly contracted in April. Overall, the EUR/JPY pair traded in a range of 149.70 and 150.36 in the past 24 hours.
According to the Bank of Japan, the country’s PPI (producer price index) rose by 5.10% y-o-y in May following an increase of 5.90% in the previous month but missed forecasts of a 5.50% rise.
The reported figure reflects the fifth successive monthly decline and the lowest level in almost two years against the backdrop of a decline in inflation.
Textile products led the increase with a 6.80% gain in May. Plastic products followed suit with a 6.30% rise. The producer prices of iron and steel jumped 9%y-o-y in May. Transportation equipment posted a gain of 3.40%. However, lumber and wood products reported a slump of 19.80%.
On a m-o-m basis, producer prices inched down 0.70% in May. This is the first decline since February.
According to the preliminary data published by the Japan Machine Tool Builders Association (JMTBA), the country’s machine tool orders fell by 22.20% y-o-y to ¥119.32 billion in May following a decrease of 14.40% in the previous month.
Domestic orders were valued at ¥37.6 billion. Overseas orders stood at ¥81.72 billion. The total value of machine tool orders was ¥646.20 billion in 2023.
According to the Italian National Institute of Statistics, the country’s industrial production contracted 1.90% m-o-m in April following a decline of 0.60% in the previous month and disappointed the market, which was expecting a 0.10% rise in industrial production.
Italy’s industrial production fell by 1.30% in the three months ended April 2023, compared with the earlier three months.
On a y-o-y basis, calendar-adjusted industrial production declined by 7.20% in April 2023. The reported figure reflects the steepest decline since July 2020. Likewise, unadjusted industrial production plunged by 10% in April 2023.
The monthly decline was led by a 2.60% decrease in the production of intermediate goods in April. Also, capital goods posed a drop of 2.10%. While consumer goods recorded a decrease of 0.40%, energy posted a drop of 0.30%.
The weak Japanese economic data from both countries are expected to keep the EUR/JPY pair range bound in the short term.
The historical price chart indicates that the EUR/JPY pair is rising after testing support at 149.70. The next resistance is anticipated only near 150.95. Additionally, the currency pair is trading above its 50-day moving average while the stochastic indicator is rising. Therefore, we anticipate the EUR/JPY pair to remain in an uptrend in the short 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.
