EUR/JPY reaches 182.00 ahead of Eurozone Industrial Production data

EUR/JPY has reached 182.00 after bouncing from lows near 181.00 earlier on the day.
Weak Japanese GDP data has curbed the Yen's upside momentum.
Eurozone Industrial Production is expected to show a significant setback in December.

Guillermo Alcala FXStreet

The Euro (EUR) is taking advantage of a somewhat softer Japanese Yen (JPY) on Monday, following downbeat Gross Domestic Product (GDP) figures, to trim some of the previous days’ losses and reach session highs above 182.00. In Europe, all eyes are on the Industrial Production release, due later on Monday.

Eurozone’s Factory Output is expected to have contracted at a 1.5% pace in December, reversing November’s 0.7% growth, as well as the moderate advances witnessed in previous months, and casting a shadow over the rhetoric of the Eurozone’s economic resilience. Year-on-year, Eurozone Industrial Production is expected to have slowed to a 1.2% growth, less than half the 2.5% yearly advance seen in November.

The Yen opened the week on its back foot, weighed down by the disappointing economic growth levels seen during the early Asian session. Japan’s Q4 preliminary GDP showed a meagre 0.1% quarterly growth against market expectations of a 0.4% advance, while the annualised rate grew 0.2%, well below the 1.6% consensus. In the previous quarter, the Japanese economy contracted 0.7% and 2.6% year-on-year.

These figures have put the theory of the Bank of Japan’s (BoJ) March rate hike into question, a feeling that was exacerbated by the meeting between Prime Minister Takaichi and BoJ Governor Ueda earlier on Monday. The BoJ chief, however, said that the meeting addressed general economic and financial developments and denied any request regarding interest rates.

Economic Indicator

Industrial Production s.a. (MoM)

The Industrial Production index, released by Eurostat on a monthly basis, measures changes in the price-adjusted output of industry. It is a widely-followed indicator to gauge the strength in the Eurozone’s manufacturing sector. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.

Economic Indicator

Industrial Production w.d.a. (YoY)

The Industrial Production is released by the Eurostat. It shows the volume of production of Industries such as factories and manufacturing. Up trend is regarded as inflationary which may anticipate interest rates to rise. Usually, if high industrial production growth comes out, this may generate a positive sentiment (or bullish) for the EUR, while low industrial production is seen as a negative sentiment (or bearish).

EUR/USD appears supported by the 200-day SMA, for now

Following an early pullback to multi-week lows near 1.1670, EUR/USD now manages to reclaim the 1.1700 region as the NA session draws to a close on Monday. The steep retracement in spot follows the equally strong move higher in the US Dollar, as investors continue to assess the geopolitical landscape in the wake of the US and Israel attacks on Iran.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold eases some ground, approaches $5,300

Gold now surrenders part of the earlier advance, reshifting its attenton to the $5,300 zone per troy ounce at the beginning of the week. Indeed, the yellow metal’s firm performance appears propped up by incresing geopolitical jitters in the Middle East, which at the same time fuels the demand for the safe-haven space.