End of the week currency markets review

USD keeps on rising as the USD Index started the week from 91.77 and it is currently moving at 92.60, a few minutes before the NFPs release. The market expects 700,000 new job positions in June and this announcement is quite critical as it will reflect the situation of the US economy in recovery after COVID-19 lockdowns but at the same time it will show if the target in Unemployment Rate is met for Fed to start tapering. We expect high volatility just after the NFPs release. The other big issue of the last few days is the so-called Delta variant which is a COVID-19 mutation, much more contagious and deadly. There are rising cases in many countries despite the high rate of vaccinations. This fact may potentially create a risk-off mood to the investors that will favor USD and JPY and it will weaken all the other more risky currencies.

EURUSD (current price 1.1827) is bearish this week as the USD strengthens and EUR is getting weaker due to the risk-off mood in the markets and due to the bad results in Eurozone and Germany. Germany had -2.4% Retail Sales vs expectations for +10.1%, PMIs results were rather better but this did not help EUR to recover. EURUSD is below the previous 3-month low at 1.1848 and it is looking at the main support of 1.17. NFPs will most likely increase volatility and may turn things upside down.

GBPUSD (current price 1.3747) is very bearish this week as it is already more than 130 pips lower than the weekly open price. Yesterday, Andrew Bailey from the Bank of England said that there are no worries regarding the high inflation and that the Bank of England will not react early. It leaves room that the Monetary Policy in the UK will remain loose and this consideration combined with the Delta variant fears, creates a negative outlook for the sterling. The price area of 1.3670 will be very critical for a possible downtrend of GBPUSD.

USDJPY (current price 111.40) has managed to break out of the important resistance area of 110.80 – 110.90 and it can climb even higher, above 112 (with the possible warning of NFPs today which may change things). This movement has more value if we consider the strong downwards direction of the bond yields this week ( the 10-year US bond yield has dropped to 1.44%). The Manufacturing Index and the Monetary Base in Japan disappointed the investors and now all eyes will fall on NFP today.

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