The US dollar performs a decline today after a very sharp bullish rally that has started at the end of March. Since the economic calendar is relatively poor in the US so far, there is no fundamental reason for this decline based on economic announcements. The US bond yields apply a corrective movement and the US 10-year bond yield dropped from 2.97% to 2.89% currently. Also, it seems that the markets are in a better mood after China’s announcement that the new cases of COVID-19 are reduced during the last few days. We need to underline that the Chinese lockdown has already caused serious problems to the supply chain and if the lockdown persists we may see an even worst case.

Most of the stock indices are bullish today, following the improved markets’ sentiment and the commodities are in a corrective trend. Tomorrow will be a much more busy day regarding the economic announcements and events. The dominating announcement is the inflation in the Eurozone and there are also the speeches from Jerome Powell (Fed), Christine Lagarde (ECB), and Andrew Bailey (BoE). Markets looking forward to getting more information about the plans of the central banks regarding the monetary policy and the possible interest rate hikes.

EURUSD (current price at 1.0848) has started a bullish reaction from yesterday after the weakness of the USD. Also, the European currency appears stronger due to the higher European bond yields. The German 10-year bond yield had climbed up to 0.95% which is its highest price since the summer of 2015. The industrial production in the Eurozone was announced earlier at 2%,  better than the markets expected. During the last hours though, the pair has retraced from the daily highs at 1.0867 and it’s very doubtful if the bullish recovery has a future. We need to see prices close to 1.10 to confirm such a hypothesis but in case of dropping below 1.08 again, the strong downtrend returns. The announcement of the inflation in the Eurozone tomorrow is very critical.

GBPUSD (current price at 1.3051) is trying to perform a mild bullish trend for the second week in a row. The perception of the markets and the investors is that the Bank of England will be more hawkish in the near future after the announcement of the very high inflation of 7%, in the UK in March. The speech of Andrew Bailey (BoE)  tomorrow is expected with great interest because we may get new hints about the monetary policy in the UK. The downtrend has not changed so far and below 1.2970 it will become very strong. As long as the price is above 1.30 there is hope and a good probability for further recovery. It will be confirmed especially in the case of a bullish breakout above 1.3150.

USDJPY (current price at 127.65) is still higher this week compared to the weekly open price but today is in a pullback from the high price of 129.40 which was also the highest price of the last 20 years. The weakness of the US currency and the falling bond yields have both assisted in this movement. Industrial production was announced in Japan better than expected but the main event for the week is the announcement of the inflation for March on Friday. Any surprise of a higher inflation rate may strengthen the Japanese Yen because markets will think that the loose monetary policy from the Bank of Japan will not carry on for a long time.