Mid-week currency markets review

The information produced by aQuant is of a general nature only. It is not personal financial advice. It does not take into account your objectives, financial situation and personal needs.
The USD in the current week is (so far) bullish. There is a risk-off mood that dominates the financial markets and the investors, that favors the American currency as it is considered an asset of lower risk, compared with other popular currencies like EUR and AUD. Monday was a neutral day with very low volatility for most of the markets. Tuesday was clearly bullish for USD but today there’s an attempt for a mild correction. The greenback seems to get over the fact that the bond yields are dropping (10-year US bond yield opened on Monday at 1.44 and it is moving currently at 1.32%) and the disappointing US data (Services PMI at 60.1 vs 63.5 expected). The big thing of the day (and of the current week) is the FOMC Minutes later today. The Minutes that will be released come from the mid-June meeting of the Fed and we expect to see if the hawkish policy of the Fed will carry on, including the period that the Interest Rates will hike. Most likely, the volatility in most of the USD currency pairs will increase.
EURUSD (current price 1.1826) is bearish so far, following the USD strength. The economic news that was announced in Germany & Eurozone were mixed, regarding PMIs, Economic Sentiment and Retail Sales, so EUR was practically neutral and the most of the weekly movement so far comes from the USD. Below 1.18 there’s a good chance for EURUSD to face the case of the strong support of 1.17, which will be an 8-month lower price. Today with the FOMC Minutes, the volatility may jump but the developed trend so far, points to the south.
GBPUSD (current price 1.3827) is trying to recover today, after yesterday’s drop below 1.38. There’s a general optimistic sense regarding the COVID-19 restrictions in the UK, even if the Health Minister stated that the new cases may exceed the number of 100,000 daily, due to Delta variation. The UK had better than expected PMIs announcements and despite the bullish attempt, the trend is still bearish and it can lead the pair below 1.38 again.  Below 1.3730 there may be a bearish trend acceleration but let’s pay extra attention today because the FOMC Minutes may turn things upside down.
USDJPY (current price 110.55) is bearish this week, although USD is getting stronger, mostly because of the falling bond yields. The pair has lost the important zone of 110.80 – 110.90 although last week it had closed above 111. Japanese scheduled news & announcements did not contribute a lot to the pair’s movements. USDJPY met the support zone at 110.40 and recovered in the short-term but now it has turned to the south again. The expected FOMC Minutes and the bond yields will signify the trend and the volatility of the USDJPY in the next few days.
AUDUSD (current price 0.7514) is neutral so far in the current week (only 9 pips below the weekly open) and that is rendered to the RBA Statement, regarding the Monetary Policy in Australia. Interest Rates did not change (0.1%) but Phlip Lowe, who is the Governor of the Reserve Bank of Australia, noted that the Interest Rates may change and this depends on the data and not on the dates. This statement gave a temporary bullish bump on the pair but it did not last as very soon AUDUSD returned to its bearish trend that is obvious since the mid-May period. Below 0.7445 this trend may become stronger but the FOMC today makes things unpredictable.

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