Yen in Focus as Japanese exports decline

4月9日

The euro against the yen this week will face impactful news that could generate movements in this currency cross. In addition to bonds and ECB releases, there will be trade balance and inflation news from several euro zone countries. Regarding Japan, although it does not seem important this week, the Ministry of Health, Employment and Welfare releases begin this week, and yesterday the Japanese overtime data, which usually represents an excess of work in the country. Also released today was average cash earnings data which adds to yesterday's data to see if there has been any improvement in the Japanese economy.

The Japanese Ministry of Economy and Finance also showed the trade balance which was severely impacted in negative compared to the previous data and compared to expectations. The consumer confidence report was also slightly worse than expected, although better than the previous figure. Another data that also accompanies in negative has been that of the association of machine builders (JMTBA), which has resulted in a particularly bad data that highlights the data on exports. As of tomorrow we will have production and Japanese bank loan data and the statement of the President of the BoJ, Ueda Kazuo in his semi-annual report that was already advanced today on the Bank's website and where he is already talking about a flat exporting economy, despite the moderate recovery of the country: boj.or.jp/en/mopo/diet/d_state/data/dst240409a.pdf.

In addition to this, on Thursday we will have data on foreign investment in Japanese stocks and bonds, closing the week with data on industrial production for the month of February.

Focusing on the chart, one can see how the currency has been turning around since December with the change in monetary policy and has returned to yesterday's March 21 prices. It is not surprising that the currency is drifting higher in an economic context of so much inflation with such weak export economic data. So the currency will be fighting its price with a bullish euro against the yen. If we look at the range that has formed a ceiling at a maximum of 165,356 yen per euro, the price is currently in the middle zone of a bullish channel so if the movement is accompanied to the upside, its high zone is likely to be around 180 yen per euro. This is more in line with reality for two reasons, the RSI is currently oversold at 64.25% and its 200 candlestick average is at 53.88% so we could see an advance in the bears. If we look at the current bell there is a triple bell with the strongest previous trading zone at the pre 150 yen boundary. So it would not be strange to see the price go back for those areas if everything works out as Ueda estimates as soon as the economic data goes with the wind in the sails of the Japanese export market.

Ion Jauregui - AT Analyst




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