End of the week currencies market review

DISCLAIMER: The information produced by aQuant 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.

USD is in a downtrend since the beginning of the current week and especially after the FOMC on Wednesday. The Fed kept the Interest Rates unchanged at 0.25% and announced its decision regarding the Monetary Policy which also remains the same. As per the growth, Jerome Powell underlined that “the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings” but what made the difference is the fact that as it seems there are no near plans for tapering as it will take a few more Fed meetings before decisions. The annualized USD GDP for Q2 2021 was also disappointing as it was released at 6.5% while the expectation was for 8.5%.
The USD Index is more than 1% lower than Monday’s open price and since there is no other important news or announcements for the rest of the week so more or less, things will be the same unless the US markets open, hiding surprises.

EURUSD (current price 1.1885) is bullish this week with 4 days in a row bullish. Today is a neutral day but the week is definitely in an uptrend due to the dollar’s weakness. The economic news in Europe is also positive in terms of Business/Industrial/Consumer Confidence in the Eurozone, German CPI, and GDP growth in the Eurozone so EUR has gathered an uptrend momentum as well. If EURUSD can stand above 1.19, then the last resistance before 1.20 is the price area of 1.1975 which is also the highest price of the last 2.5 months.

GBPUSD (current price 1.3963) is very bullish this week, performing so far more than 200 pips, compared to the weekly open price. The Delta variation is in recession in the UK as the number of new cases is circa 30K which is significantly lower than the 60K new cases a few days ago. The UK economic calendar had nothing important to offer during the last days so the USD weakness and the improved pandemic image in the UK, dominated the pair. GBPUSD was not ready to surpass the milestone price of 1.40 because many sellers appeared at this level but it seems that it is gathering fuel to try again. As long as the dollar’s weakness stands, the breakout of 1.40 is something achievable.

USDJPY (current price 109.65) is bearish, moving below 110 as the bond yields are down this week. The US 10-year bond yield opened the week at 1.28% and now it is close to 1.24%. The weakness of the USD contributes to the pair’s downtrend as well as the strength of JPY which turned bullish, especially after the Unemployment Rate announcement at 2.9% which is below expectations and shows that Japan is in good economic shape. Today the pair is trying to recover from its weekly low price at 109.36 but it’s very difficult to exceed the price area of 110 this week. In the south direction, the bearish movement can accelerate if USDJPY drops below the support of 109.05.

USDCAD (current price 1.2430) is more than 100 pips lower this week as the USD is getting weaker after FOMC but at the same time, CAD is favored due to the higher oil prices (oil is the most important part of the Canadian economy). Canada also announced the inflation in June at 2.7% which is higher than the expected price of 2.4% and this fact creates hopes for a tighter Monetary Policy from the Bank of Canada. Also, a few minutes ago the GDP in May was announced at -0.3% and it does not seem to affect the pair seriously so far. USDCAD is already below 1.25 and the road to 1.2250 is open as long as USD appears weak.

 

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