EUR/JPY hesitates near 183.50 despite positive Eurozone PMI data

EUR/JPY is looking for direction around 183.50 after bouncing from lows sub-182.00 last week.
Risk-aversion is weighing on the Euro, despite upbeat Eurozone data.
Takaichi praised a weak Yen earlier on Monday.

Guillermo Alcala FXStreet

The Euro is practically flat against the Yen on Monday. trading at 183.55 at the time of writing. The risk-off market is offsetting the positive impact from upbeat Eurozone and German manufacturing PMI figures, while the Yen remains on its back foot, following Japanese Prime Minister Sanae Takaichi’s comments praising Yen weakness.

Manufacturing activity in the Eurozone region improved to 49.5 in January, beyond the preliminary estimations of 49.4 from 48.8 in December, as reported by the HCOB Purchasing Managers’ Index Release.

Likewise, German Manufacturing PMI has been upgraded to 49.1, from preliminary estimations of a steady 48.7 reading, and data released earlier on Monday revealed that German Retail Sales increased against expectations in December.

Takaichi talks down the Yen

In Japan, Prime Minister Takainchi said earlier on Monday that a weak Japanese Yen poses an advantage to Japanese exporters, a rhetoric opposed to her finance minister’s efforts to stem Yen depreciation, which have included serious intervention warnings in recent weeks.

The Yen has also taken a beating from reports pointing to a landslide victory for Takaichi in the snap elections next week. Investors are wary that a stronger parliamentary support will encourage the prime minister to deepen her commitment to lower taxes and large economic stimulus policies, adding pressure on the country’s strained finances.

Economic Indicator

HCOB Manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in the Eurozone manufacturing sector. The data is derived from surveys of senior executives at private-sector companies from the manufacturing sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for EUR.

Economic Indicator

HCOB Manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in Germany’s manufacturing sector. The data is derived from surveys of senior executives at private-sector companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. As Europe’s main manufacturing hub, German PMI data can also be a bellwether of the sector’s health in the broader continent. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for EUR.

GBP/USD drops to multi-week lows below 1.3300

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EUR/USD meets support near 1.1370

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Gold struggles to extend gains beyond $4,100

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Bitcoin vs Gold: BTC and Gold struggle to gain momentum despite US-Iran truce

Market participants are changing gears on Monday from the war between the United States (US) and Iran in the Middle East to the anticipated Federal Reserve (Fed) interest rate decision. Meanwhile, Bitcoin (BTC) and Gold (XAU) are losing momentum, with BTC slipping below the pivotal $65,000 level while XAU remains sideways in the $4,000-$4,100 range.

Pause in military action fails to inspire market rally

More tech volatility has outweighed the impact of the pause in US-Iran fighting, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG. When a calming of Middle Eastern hostilities fails to provoke a major up day in stocks, you know there is more trouble ahead.

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