London 25/3/2022
President Biden is in Europe during the last days to keep the alliance of all the Western countries united against Russia. The United States and the European Union are very close to a deal for LNG supply that may partially resolve the energy crisis issue that hits the European continent lately. The war is still raging but this news has developed a better investment sentiment in the global markets.
The US and the UK stock indices end the week with profits while the European ones are mildly bearish. Most of the commodities, including gold and oil, are bullish this week and it makes sense to underline the uptrend that Bitcoin and most of the cryptocurrencies have developed. Finally, the bond yields are in an extreme rising course with the US 10-year bond yield opening the week at 2.15%, and a few hours before the week closes in, it is above 2.45%.
The US dollar became stronger this week, reflecting the risk-off mood of the markets. Most of the other major currencies declined with the exception of the Swiss franc which is considered a safe-haven asset and much correlated with gold. Yesterday, the US announced the durable goods orders in February, much below the markets’ expectations. Most of the major currency pairs perform relatively low volatility this week.
EURUSD (current price 1.1010) is bearish this week following the strength of the US dollar. The pair though has managed to stay above the milestone price of 1.10 so the downtrend is not sharp enough. Most of the German, the French, and the Eurozone PMIs in March that was announced yesterday were above expectations and this is a positive sign for the sentiment of the European markets. The EURUSD needs a solid breakout above 1.1140 for a further uptrend movement but in case it drops below 1.0960, most likely it returns to its heavy downtrend and the major support close to 1.08 maybe he threatened.
GBPUSD (current price 1.3205) most likely will end this week bullishly and this will be the second week in a row with an uptrend. The GBPUSD was in an oversold condition since it had dropped from 1.36 to 1.30 in just 3 weeks. The UK Services PMI was announced yesterday at 61 which is pretty much impressive but the retail sales in February fell by 0.3% although the markets expected a 0.6% rise. This fact did not affect the sterling seriously as the risk mood is a most critical factor than the last month’s economic performance. Since the war still continues and since most of the markets’ analysts expect that the US will end this year with higher interest rates compared to the UK We may see the pair declining again, especially in the case of the USD strengthening.
USDJPY (current price 122.01) continues to rise with a heavy uptrend for the third week in a row. The stronger USD and the rising explosion of the bond yields have helped the pair to climb in multi-year highs. Also, the Japanese currency remains weak, given the continuous loose monetary policy and the policy of negative interest rates from the bank of Japan. The Japanese inflation that was announced earlier today at 0.8%, is above expectations but still low enough and not able to make the Bank of Japan change its mind for the moment. The next major resistance for the USJPY is a bit below 124.
DISCLAIMER: The information produced by a-Quant 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.
