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FOREX: EURJPY Rises Above the 20-Day EMA Amid Broad Yen Weakness

FOREX
  • Amid the US Labor Day holiday, core fixed income markets have been under pressure and combining this with stronger equity markets, the Japanese Yen is the clear underperformer in G10.
  • This allowed USDJPY to briefly rise to a fresh two-week high above 147.00 and has underpinned a very solid day for cross yen, with the likes of EURPY and AUDJPY outperforming, up 0.65% and 0.85% respectively on the session.
  • Despite the EURJPY bounce, we remain shy of the mid-August highs and the overall trend outlook remains bearish, reinforced by moving average studies that remain in a bear-mode set-up. However, the cross is now north of the short-term downtrendline drawn off the mid-August high (crossing today at 161.40) and has breached the 20-day EMA, a clear break of which would expose the 50-day EMA, at 164.69.
  • In similar vein, the Swiss Franc has also been under moderate pressure on Monday and the price action comes ahead of CPI figures due tomorrow. A print in line with consensus would consolidate the running average of Q3 inflation significantly below the SNB's projection of 1.5% Y/Y for this quarter, and might solidify market pricing factoring in a not insignificant probability of a 50bps cut at the September 26th meeting.
  • Both Swiss inflation and growth data headline the European docket on Tuesday, which will be followed by US ISM Manufacturing PMI figures.
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