Breakdown of the latest developments on the global exchanges
Dec 1, 2021, 11:19 AM GMT

German Consumption Remains Subdued in November, EURJPY Strengthens

German Consumption Remains Subdued in November, EURJPY Strengthens

The biggest economy in the Eurozone remains exposed to global supply shortages, as German consumption shrunk last month. Despite this, the overwhelmed euro is attempting to consolidate against the yen near the recent dip, which could be a prelude to a trend reversal. You can read more about the euro's struggles from our latest EURUSD analysis.

Earlier today, Eurostat posted the German retail sales for November. German consumption shrunk marginally last month, missing the preliminary forecasts. The contraction was observed in spite of the better-than-expected services PMI over the same period, which underscores the impact from the fallout of the global supply and demand imbalances that remain a major impediment to recovery.

EURJPY 4H Price Chart

As can be seen on the 4H chart above, the EURJPY appears to be consolidating around the major support level at 128.450. The underlying downtrend is represented as a regression channel.

Following a recent resurgence of bullish momentum, highlighted by the growing histogram of the MACD indicator, the price action may be in the early stages of establishing a new trend reversal.

In order for the price action to break the downtrend, it would have to penetrate above the upper limit of the regression channel and the 23.6 per cent Fibonacci retracement level at 128.909. Notice, however, that the 50-day MA (in green) runs parallel to the channel's upper boundary, making it an even more prominent resistance.

Should the price action manage to break out above the 23.6 per cent Fibonacci, its next likely target would be the 38.2 per cent Fibonacci at 129.789. The latter was recently crossed by the 100-day MA (in blue).

German consumption remains subdued

Germany MoM Retail Sales

According to the findings of Eurostat's report, German consumption shrunk by 0.3 per cent in November, missing the market forecasts of a 1.0 per cent expansion. Retail sales thus remained negative for the second consecutive month following the sizable 1.9 per cent contraction that was recorded in October.