Market wants Central Bankers comments

Good morning from Hamburg, and welcome to the Varengold Daily FX Report. Last weekend, the Bank for International Settlements meeting took place. The market was expecting some comments from the central bankers on the current situation of inflation, economic growth and energy prices.

Market review

The BIS meeting ended on Sunday and its participants have warned that there is a high risk of inflation due to surging energy prices. The situation is weakening the economy in rich as well as poor countries. Energy prices are not stopping to increase; last week, oil hit a record high of $143, up more than 47% so far this year.

The market is now expecting the USD to fall against a basket of currencies. In fact, speculators reversed their bets and started to expect the situation to degrade as the US consumer confidence seems to be weaker on the oil prices high increase. Some data has shown that the US consumer sentiment reached a 28 year low.

As a result, the EUR/USD hit a 3 week high of 1.5798 earlier last night. The currency pair is currently being traded at 1.5790. The GBP/USD is also matching a 2 month high hit on Friday at 1.9952.

The Japanese economy is still facing some troubles as the housing level has been decreasing for the last 11 months. Confidence levels from Japanese firms have also been decreasing from - 6 to -14 in June. In spite of this negative data on Japan’s economy, the JPY is up against other major currencies. The USD/JPY fell by 0.3% to 105.73 and reached a 3 week low. The EUR/JPY was also down 0.1% at 167.39.

AUD/USD

In June, the AUD/USD rebounded from the support level at 0.9321 and started an upward movement. The cross through the level at 0.9502 gave the pair a further upward push. The next level is the resistance at 0.9648, which will have an influence in the future trading direction. Depending on whether the currency will break through or rebound, you could use the development for profits.

EUR/USD

The EUR/USD has been trading in a horizontal trading range with a resistance at 1.5800 and a support at 1.5300. After it touched the bottom of the channel in the middle of June, the currency started an upward movement and is quoting close to the upper resistance. The future development might depend on a clear breach.

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