End of the week currency markets review

This week closes in without significant movements in the currency markets. During the last three days, the USD Index is moving into a tight range and so do most of the USD FX pairs. The annualized US Q1 Gross Domestic Product rose by 6.4% which was exactly the market expectations and the Durable Goods Orders in the USA announced lower than expected but both these important announcements were ignored by the traders and the investors as they do put the main focus to the Monetary Policy of Fed upon the Inflationary issues.
There are also many concerns regarding the return to normalcy after the COVID-19 era, based on the new Delta and Delta plus variants which are considered to be more infectious and dangerous than the usual variants.

EURUSD (current price 1.1945) is bullish this week and most of its movement took place at the beginning of the week. Germany and the Eurozone had encouraging PMI announcements on Wednesday and especially Germany had positive Business Climate results as well. The pair is trying slowly to recover the price area of 1.20 but the volatility (especially in the last three days) is very low. The big question is if this week’s bullish trend is just a technical reaction to last week’s USD strengthening or the pair is getting it over. It means that 1.20 is a very critical price area for EURUSD as it can define the trend of the next few days.

GBPUSD (current price 1.3897) started the week with a strong bullish trend but after the dovish statements from the Bank of England yesterday. There are no plans in the near future for a Monetary Policy tightening as Inflation is at a controllable level and this fact makes the sterling weaker. The pair touched for a while the milestone price of 1.40 but it is currently moving more than 100 pips lower after the Bank of England session. The strongest support of this price neighborhood is at 1.3785 and below this level, GBPUSD takes a downtrend.

USDJPY (current price 110.74), after the first three bullish days of the week, is performing a soft retracement as it seems that for the moment it can not exceed the resistance of 110.85. Bond yields that are highly correlated with USDJPY have a mild upwards movement during the last three days but the pair does not react accordingly. Japan had neutral-to-positive economic announcements and this fact gave some credits to the Japanese currency. Although there’s a certain pullback from the aforementioned resistance, USDJPY does not have characteristics of a bearish trend so far so in the case of a strong USD again, it can climb higher.

AUDUSD (current price 0.7597) has a clear bullish trend this week as all the days were bullish. The pair performs better than the weak USD should cause as the stock markets and some commodities support the Australian currency. Above 0.7650 (almost 50 pips higher than the current price) AUDUSD may take characteristics of a bullish trend that will take back all the bearish movement of the last week.

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