Forex Weekly Analyses

Weekly EURUSD, GBPUSD, USDJPY Forex Analysis June 27 – July 04, 2022
The large drop in commodity prices (including oil) helped to relieve inflation fears, and the focus has turned to the risks of an incoming global recession. If inflation is really peaking here, it will have significant implications for central banks. They will likely not need to tighten and hike rates as aggressively as currently anticipated. The Fed would probably also tone down its hawkish stance in such a scenario. The markets already adjusted rate hike expectations lower last week, which is the reason behind the extension of the USD correction and the fall in bond yields.
Weekly EURUSD, GBPUSD, USDJPY Forex Analysis June 13 – June 20, 2022
Friday’s hotter than forecasted CPI inflation report provided the additional boost needed for the greenback to resume its uptrend. High inflation will keep the Fed firmly on its hawkish path. A 50bp rate hike is fully expected and priced in by the markets for the meeting this Wednesday. But the Fed will have the chance to send a more hawkish message via the dot plot economic projections and Powell’s press conference. Thus, the dot plot and the forward guidance will again be the key market drivers.
Weekly EURUSD, GBPUSD, USDJPY Forex Analysis June 06 – June 13, 2022
The dollar finished the past week moderately stronger, finding a bid into the Friday close on that solid Nonfarm payrolls report. Coming in at 390k, the NFP beat the consensus expectations of 325K. Other parts of the jobs data were mixed but healthy overall and will undoubtedly keep the Fed firmly on its hawkish trajectory of quantitative tightening (QT) and 50bp rate hikes. Thus, after two weeks of correcting lower, the dollar may be ready to rebound higher again and can perhaps even resume its uptrend to fresh highs.
Weekly EURUSD, GBPUSD, USDJPY Forex Analysis May 23 – May 30, 2022
With near-term sentiment now in a “corrective” mood, it looks likely that this US dollar retracement can extend a bit further. Sideways consolidation also looks like a probable scenario. That being the case, the long-term dynamics haven’t been altered, and the predominant bullish trend should remain intact. Fed communication is still firmly hawkish, and quantitative tightening (QT) and 50bp rate hikes will happen in the coming months. In contrast, other central banks fall significantly behind the Fed in terms of tightening policy. This divergence between the central banks should continue to support the USD and eventually extend the existing uptrend.
Weekly EURUSD, GBPUSD, USDJPY Forex Analysis May 16 – May 23, 2022
The upside surprise in CPI inflation last week unleashed a new wave of USD bullish momentum and eventually took the DXY dollar index to a fresh cycle high, touching the 105.00 level. A risk-off episode in global stock markets additionally helped to fuel USD strength, especially vs the risk-sensitive currencies (AUD, NZD, CAD). Interestingly, other safe-havens like the yen also benefited, which was an outperformer on this risk aversion episode after a prolonged period of weakness (more in the JPY section below).
Weekly EURUSD, GBPUSD, USDJPY Forex Analysis May 09 – May 16, 2022
We are entering a quiet period on the economic calendar following a busy previous week. The dollar retained strong levels, though it experienced a short-term correction after the Fed meeting on what seemed like a “buy the rumor sell the fact” behavior. The markets were already positioned for a very hawkish Fed, which Powell and company delivered, but Powell’s comment that an even larger 75bp hike is off the table for now was a reason for some profit-taking that triggered a retracement.
Weekly EURUSD, GBPUSD, USDJPY Forex Analysis May 02 – May 09, 2022
The opening week of a new month usually comes with a busy economic calendar, and this one is no different. The main highlights in the US are the Fed meeting on Wednesday and the Nonfarm Payrolls report on Friday. The longer-term trend, which is the divergence between the hawkish Fed and other central banks that are either less hawkish or outright dovish (e.g., BOJ), will likely keep the dollar strong during this and in the coming weeks. Aside from the hawkish Fed supporting it, another reason for the strong dollar is the weakness in other currencies (more about this in the sections below).
Weekly EURUSD, GBPUSD, USDJPY Forex Analysis April 25 – May 02, 2022
The past and this week are a quiet period ahead of the busy first week of May that features, among else, the Fed meeting and the Nonfarm payrolls report. Thus, without anything that can alter the longer-term Fx drivers, the markets’ focus is fixated on the divergence between the hawkish Fed and other central banks that are either less hawkish or outright dovish (e.g., BOJ). This policy divergence is and will likely continue to push the dollar higher in the coming weeks.
Weekly EURUSD, GBPUSD, USDJPY Forex Analysis April 19 – April 25, 2022
The dollar is extending the rally as the policy gap between the Fed and other central banks continues to widen. US Treasury yields climbed further, and over the Easter break, Fed speakers kept talking about fast QT and 50bp rate hikes. The most hawkish voice at the Fed, St. Louis Fed President James Bullard (voter this year), even talked about the possibility for even larger, 75bp rate hikes. He wants to swiftly raise rates to 3.5%, which in his view will effectively curb inflationary pressures. Few other central banks are in the same position, and this divergence should continue to underpin the USD dollar during this and the following weeks.