London 15/04/2022
Today is a public holiday in many countries as it is the Good Friday before the Catholic Easter and most of the financial markets are closed.  The Foreign Exchange market is open though but the volatility today is very low, as expected. The US dollar is very bullish this week and it returned above 100, after a short pullback. The US currency returned to the price zone that was in the spring of 2020 when the pandemic was beginning. It is strong because it is considered to be a safe currency selection in a risk-off mood and because the Fed shows signs of iron will for fighting the great issue of the inflation, by applying several interest rate hikes and tightening the monetary policy by reducing its balance sheet. The US retail sales dropped in March but the dollar did not have any serious impacts from it.
In Europe, the European Central Bank left the interest rates unchanged in the Eurozone and the policy settings unchanged too. Christine Lagarde underlined that the Quantitative Easing will end in the third quarter of 2022 and that a possible interest rates hike may come after this. The markets interpreted the ECB session and the press conference as a dovish attitude and the EUR performed serious losses.
Most of the stock indices ended the week with a downtrend and the commodities kept on rising. The bond yields continue the bullish rally and the US 10-year bond yield is currently at 2.83%, which is the highest rate since December 2018.
EURUSD (current price at 1.0813) is very bearish this week, affected by the dollar’s strength with the hawkish perception of the US monetary policy after the US inflation announcement at 8.5% in April. The euro is also weak as the ECB does not seem to hurry in a possible interest rate hike. The rest economic calendar is almost ignored by the markets and only the war developments, the inflationary issues, and the central bank plans are on the spot. There is strong support at 1.08 and it seems that the pair around this price zone has difficulty dropping further but in case of a solid bearish breakout, the next support exists at 1.0635.
GBPUSD (current price at 1.3065) managed to recover from its lowest weekly price of 1.2973 which is also the lowest price since the November of 2020. The UK announced the inflation in March at 7% vs 6.2% in February and this fact has created expectations that the hawkish outlook in the Bank of England will return and that there will be a series of interest rate hikes throughout the year. As long as the GBPUSD stands above 1.30 there is a serious probability of recovery but this needs to be validated by a bullish break out above 1.33. Below 1.30, the trend turns bearish and it becomes stronger.
USDJPY (current price at 126.48) is ending another week (the 6th in a row) with a sharp uptrend. The strength of the US currency, combined with the rising bond yields and the weakness of the Japanese yen has boosted the pair and the price area of 126.85 (which is just 45 pips away from its current price) becomes very critical. Above 126.85 the USDJPY will be at its highest price in the last 20 years. Technically speaking, although the trend is strongly bullish and the weekly ADX indicator is close to 60 (it means a rarely strong trend), the RSI indicator on the weekly chart is above 85 which indicates very overbought conditions with a good probability of a correction.

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.

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