The trajectory of the Euro is uncertain as the EUR/USD pair has deviated from its previously bullish path. Its failure to maintain a position above 1.1000 and subsequent descent below the 1.0900 threshold has further precipitated a challenge to a crucial trendline support, leaving it open to speculation whether or not the bears will be able to reverse this trend. Despite the Bank of England’s decision to increase rates by 50 basis points, the British Pound has experienced a considerable decline throughout the week due to concerns regarding a potential economic recession. The Australian Dollar experienced a decline last week due to the US Dollar’s resurgence in strength amidst the Federal Reserve’s indication of an increase in interest rates and uncertainty in Australian bond market leading to a possible decrease in AUD/USD exchange rate. The Japanese Yen is likely to face further difficulties as it enters a week filled with US data, with the Federal Reserve and the Bank of Japan appearing to diverge once again. The upcoming week may see the US dollar maintaining its current range as it awaits cues from PCE price index data that is set to be released on Friday. During Fed Chair Jerome Powell’s two-day testimony before Congress, he reaffirmed the hawkish stance of the Federal Reserve on interest rates
The Japanese Yen is currently being monitored for potential interventions, following statements made by Japan’s leading currency diplomat. The Bank of Japan has summarized opinions regarding the adjustment of yield curve control. There is a question surrounding the future prospects for USD/JPY, EUR/JPY, and GBP/JPY.
Asian stocks are expected to have a mixed open with the Nikkei and ASX down, while the KOSPI is slightly up. Chinese equities are under pressure, with the Hang Seng Index unwinding all of its past two weeks’ gains. Economic news is relatively quiet, with Thailand’s trade data and Singapore’s industrial production being released. Singapore’s exports have seen an 8th straight month of contraction, and its production may track that weakness with expectations for a deeper year-on-year contraction. The Straits Times Index continues to trade within a symmetrical triangle pattern. Any breakdown of the lower triangle trendline could leave the March 2023 bottom on watch at the 3,100 level.