End of the week currency markets review
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After the inflation announcement on Wednesday, USD turned bearish. The USD Index opened on Wednesday at 93.06 and is currently moving at 92.80. Probably the markets expected higher inflation to anticipate a possible early tapering and the result caused the dollar’s weakness.
Besides this, two certain events have developed a risk-off mood recently: the China regulatory issues, mostly on the tech sector, and the Delta variant of COVID-19 that has caused concerns as high numbers of new cases and some restrictions in many countries have appeared again.
EURUSD (current price 1.1760) has performed about 55 pips after the approach of the strong support of 1.17, as a result of the US inflation announcement on Wednesday. The Industrial Production in Eurozone and the Wholesale Price Index in Germany, released below the expectations, and EUR could have a better performance if those results were positive. EURUSD has not changed the character of the downtrend that began about 3 months ago and it may try to break out the 9-month low price (below 1.17) again.
GBPUSD (current price 1.3825) is still bearish this week, despite the weakness of the USD from Wednesday and on. On Thursday there was a series of economic announcements in the UK. The Q2 2021 GDP was released at 4.8% as the markets expected but the Trade Balance and the Industrial Production were both below expectations and this caused pressures on the sterling. The pair dropped to 1.3790 and today there is an attempt for a mild bullish reaction, but it seems anemic. As long as GBPUSD moves between the channel of 1.3570 and 1.3980 there is no clear trend.
USDJPY (current price 110.21) has turned bearish after Wednesday’s inflation announcement in the US but it is still above the milestone price of 110. The bond yields during these 3 days stayed, more or less, unchanged but Japan had a Producer Price Index in July, better than expected and this was one more reason for the bearish trend of the pair. Above 110, USDJPY keeps its bullish direction unchanged.