End of the week currency markets review

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The Fed decision on Interest Rates and Monetary Policy on Wednesday did not hide any changes as the Interest Rates remained at 0.25% and theĀ  Monetary Policy stayed as it is but there were some important hints from Jerome Powell. The tapering (the reduction of the Fed’s bond-buying program) will start soon if the progress of the US economy carries on. Also, most likely the Interest Rates will hike in 2022. During these statements, the volatility of the USD FX pairs increased a lot and the overall result was the strengthening of the USD. On the contrary, USD was weak on Thursday as the news from Evergrande calmed down the investors, developing a risk-on mood. The USD is getting stronger again, ahead of Powell’s speech, later today.
EURUSD (current price 1.1716) keeps its slight bearish direction after a bullish direction yesterday. The PMIs in Eurozone, Germany, and France missed the expectations yesterday and today the Business Climate in Germany also announced below expectations. The EURUSD is in an obvious downtrend during the last 3 weeks and it copes with the support of 1.17 and 1.1660. Below those two supports, there is the 11 months low price at 1.16 and there are many analysts that predict prices like 1.13 until the end of the current year.
GBPUSD (current price 1.3673) is bearish this week, despite the bullish reaction yesterday. The Bank of England kept the Interest Rates at 0.1% and left the Monetary Policy unchanged but the UK economy is facing serious issues that have to do with the lack of workers & drivers and the supply shortage. Under these circumstances, the GBPUSD may drop to the price area of 1.36 but below 1.3570, the pair may take a free-fall character as there’s no obvious support for the road to 1.30.
USDJPY (current price 110.52) has had consolidative movements all over the week but today it has a clear bullish direction that lifted it, much above 110. The bond yields had an explosive rise ( the US 10-year bond yield surpassed the price of 1.40% for the first time since the beginning of July). The inflation in Japan is still in negative territory and if the pair manages to break out above 110.80 then it can reach the price area of 111.70.


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