London 29/04/2022
The current week it’s closing in and the strength of the US dollar continues, Although today there is an important correction. The negative sentiment that has been created with the war in Ukraine makes the dollar very strong as the majority of the investors prefer safer solutions. The most important economic announcement of the week is inflation in the Euro Zone area. The inflation in April was announced at 7.5% just as the markets expected. Another important announcement came from the US, regarding the Core Personal Consumption Expenditures Which had a rate of 5.2% in March which is slightly lower than the 5.2% that the markets expected and it was considered another sign of the inflation stability in the US. This announcement offered temporary support to the dollar but very quickly it returned to its bearish course today. This week we also saw the announcements of the GDP from both us and the Eurozone. In both cases, the results are mixed so it seems that the markets almost ignored it.
Bearish is the trend of the stock indices in the US this week but in Europe, the trend is mildly bullish. The gold performs some losses this week but the US oil performs profits. Finally, the bronchioles have a neutral week and the US 10-year bond yield is currently at 2.89% which is very close to the weekly opening price.
EURUSD (current price at 1.0544) is very bearish this week, mostly through the strength of the US dollar. The macroeconomic results from the Eurozone area and Germany was a factor that more or less was ignored by the markets. The US dollar is at the center of the attention of the investors as the Fed Looks very determined to fight inflation through several interest rate hikes throughout the year. This perception has gathered many investors that buy the American currency. The important support at 1.0635 was broken out and on Thursday the price dropped below 1.05. The next important support for the currency pair is at 1.0340.
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GBPUSD (current price at 1.2564) has had one of the most bearish weeks during the last months. The Bank of England May hike the interest rates another 0.25% after the three hikes in the recent last months but it seems that the markets consider that the Fed is more aggressive on this. Also, the latest bad economic results from the UK show that the war in Ukraine will have a bigger impact on the country’s economy than it was initially considered. Remarkably, the pair managed to stay above the milestone price of 1.25 as today, a bullish recovery is attempted but the heavy downtrend has not changed so far.
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USDJPY (current price at 129.78) has its eighth week in a row with a strong bullish direction. During the current week, the pair was above 130 and it is something that has not happened in the last 20 years. All the factors help it: the strength of the US dollar, the rising bond yields, and the weakness of the Japanese currency. More specifically, yesterday the interest rate decision and the monetary policy statement from the Bank of Japan took place. The rate remained unchanged at -0.1% but the monetary statements were dovish enough as there was a pledge that the easing may continue to earn the pre-covid economic growth and stability. The trend is heavily bullish and for the moment only some profit-taking actions may cause corrections.
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