Euro holds gains against Japanese Yen following Eurozone Retail Sales

EUR/JPY remains stronger after upbeat German factory orders and improving Retail Sales data.
Eurozone Retail Sales rebounded 0.2% MoM in May, lifting the year-over-year volume up by 1.6% as consumer spending recovered.
The JPY weakens despite 10-year JGB yields hitting a 30-year high of 2.83%, crushed by surging import costs.

Akhtar Faruqui FXStreet

EUR/JPY continues to gain ground for the second successive day, trading around 185.30 during the European hours on Monday. The currency cross remains stronger as the Euro (EUR) holds ground following the release of key economic data from the Eurozone and Germany.

Eurozone Retail Sales rose by 1.6% year-over-year in May, as expected. The previous reading was a 1.0% increase. Meanwhile, monthly growth was 0.2%, against a 0.3% gain, but swinging from a 0.4% decline prior.

Germany's Factory Orders jumped 1.9% in May, faster than the 1.2% estimates. In April, the economic data declined by 3.2%, revised higher from -3.8%. On an annualized basis, Factory Orders surge 6.2% against the previous reading of 2.1%, revised higher from 1.6%.

The EUR/JPY cross advances as the Japanese Yen (JPY) weakens, caught in a high-stakes tug-of-war. Despite 10-year Japanese Government Bond (JGB) yields climbing to a fresh 30-year high of 2.83%, the JPY buckled under the weight of surging import costs. This deep market divergence has put traders on high alert for potential verbal intervention from Tokyo.

Analyzing recent price action, Teppei Ino of MUFG noted that the USD/JPY pair opened near 161.78 and briefly tested 162.84 before reversing. This reversal was fueled by broad US Dollar (USD) weakness following a soft employment report and comments from Fed Chair Kevin Warsh. However, because the Yen remained relatively weak compared to other G10 currencies amid the Dollar sell-off, the EUR/JPY cross maintained its upward momentum.

Economic Indicator

Retail Sales (YoY)

The Retail Sales data, released by Eurostat on a monthly basis, measures the volume of retail sales in the Eurozone. It shows the performance of the retail sector in the short term, which accounts for around 5% of the total value added of the Eurozone economies. Retail Sales data is widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the YoY reading comparing sales volumes in the reference month with the same month a year earlier. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.

GBP/USD dips below 1.3350 with bullish momentum losing steam

The British Pound ticks lower against the US Dollar Monday, attempting to close a seven-day rally, as tensions rise again in the Strait of Hormuz, one of the critical points in the peace process between Washington and Tehran. The GBP/USD pair trades near 1.3340 at the time of writing, down from 1.3387 highs last week, although it maintains a near-term bullish trend intact.

EUR/USD drops toward 1.1400 as US Dollar rebounds

EUR/USD pair trades marginally lower, heading toward 1.1400 in the European session on Monday. The pair faces slight selling pressure as the US Dollar gains ground after a negative weekly close. Middle East concerns and the USD/JPY rally support the Greenback.

Gold hangs near daily low amid Hormuz risks; receding Fed hike bets limit losses

Gold recovers slightly from the daily low, albeit it retains the negative bias, and remains below a two-week high touched earlier this Monday. The US Dollar attracts some safe-haven flows amid tensions over the Strait of Hormuz and undermines the bullion. However, receding US Federal Reserve rate hike bets might hold back USD bulls from placing aggressive bets.

Dogecoin recovery stalls amid early signs of whale support

Dogecoin (DOGE) price nears $0.0770, maintaining a broadly consolidative tone for the last three days after Friday’s 4% rebound. The first-ever meme coin is losing retail interest as DOGE derivatives volume drops, while on-chain data shows early signs that large-wallet investors, commonly referred to as whales, are expanding their holdings.

Week ahead – ISM services PMI and Fed Minutes to shake Fed hike bets

The US dollar is finishing the week on the back foot against most of its major counterparts this week, losing the most ground against the kiwi, the franc and the pound. Despite the pullback, investors remained adamant in their view that the Fed may have to press the rate hike button before the turn of the year.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.