Tags: Australian Economy, Forex Market, New Zealand Economy, UK Economy, US Economy, US Stock Market
USD remains near a 20-year high. Euro is encased in turmoil

USD, EUR, GBP, AUD, and NZD’s moves Wednesday – Market Warp

Traders continued buying safe-haven dollars on Wednesday. As a result, the EUR/USD pair struggled. After soaring from the multi-month low near 1.1891 in the previous week, the common currency declined again while the dollar rallied. However, the pair managed to gain 0.05% today. It traded at 1.1902 at last.

Meanwhile, the U.S. Dollar Index remained strong at 92.03, rising by 0.02% against its six major rivals. Traders are pessimistic about the spread of the coronavirus’ highly infectious Delta variant, as well as its impact on the global economy.

U.S. Federal Reserve Governor Christopher Waller thinks that the central bank should start discussing tempering its massive stimulus program this year to raise interest rates by late 2022.

On Wednesday, the shared currency gains were limited, even though the economic data released on Tuesday was upbeat. In the Eurozone, Consumer Confidence came at -3.3 in June, up straight for the fifth time. Furthermore, the Service Sentiment was 17.9 this month, much above the market expectations. The Eurozone Economic Sentiment hit 117.9 in June, reaching the highest reading in the last 21 years. Currently, traders are waiting for the Eurozone Core Inflation and German Unemployment data.

 How did the GBP/USD fare today?

GBP/USD showed a corrective pullback from the weekly low of approximately 1.3842 during the early Asian session today. It tumbled down to the lowest level in a week.

Furthermore, the cable pair’s latest rally failed to defy the downside momentum. As a result, GBP/USD stayed below the key EMA with the same MACD conditions. Thus far, the pair remains on the sellers’ radar.

Afterward, an upward sloping trend line from early February, 1.3800, becomes the key nearby support to watch. But with the release of mixed U.K. data, the British Pound continued dropping.

Analysts forecasted yesterday that GBP would dip below 1.3860, but they thought that the pair wouldn’t plunge as low as 1.3820. However, GBP/USD traded as low as 1.3814 at one point before recovering slightly.

The Aussie halted its recovery. Why’ that? 

The Australian dollar tumbled down on Tuesday, declining toward 0.7510 despite an improved risk sentiment and soaring commodity prices.

U.S. and European equities skyrocketed to record highs. On the other hand, treasury yields remained flat. The Bloomberg commodity index recovered after the FOMC sell-off, as well. Against this backdrop, the AUD should have outperformed most major currencies. However, it struggled to begin any upward momentum.

As there is a little catalyst for the AUD/USD sell-off, the analysts think that increasing uncertainty surrounding the emergence of the coronavirus’ Delta variant, especially across Europe and emerging markets, is the reason for the pair’s struggle.

Traders worry that this resurgence of the virus will devastate those countries that remain primarily unvaccinated and further derail the global economic recovery. There is also the danger of rising inflations.

Some analysts think that the AUD is still fundamentally undervalued. However, near-term headwinds should ensure the pair’s limited upside through the coming days and weeks.

Despite the risk-on mood, haven currencies outperformed on the market on Tuesday. The Japanese yen closed the session as the top performer against its major counterparts. The dollar tumbled down against the yen, but it still enjoyed broad gains, mostly thanks to a decline in the EUR and the GBP.

The single currency tumbled down below 1.19 while the British Pound struggled to hold onto moves near 1.38 as the correlation between forex markets and other financial assets widens.

Traders seem concerned the emergence and spread of the Covid-19’s Delta variant could hinder the global economic recovery. As a result, demand for haven assets is rising, simultaneously pushing commodity and growth-linked currencies lower.

 How did the NZD/USD pair fare? 

The NZD/USD pair had to surrender its intraday gains. The Kiwi tumbled down to fresh daily lows, trading around 0.6980 during the early European session on Wednesday.

However, the pair managed to gain some positive traction during the early part of the trading action before trying to capitalize on the move.

Investors remain worried about the economic impact of the spread of the Delta variant of the coronavirus through many Asian countries. This, along with a modest U.S. dollar strength, capped the upside for the NZD/USD pair, rather prompted some fresh selling at higher levels.

The USD has gained support by speculations that the Federal Reserve plans to tighten its monetary policy if price pressures continue to intensify. Currently, the NZD/USD pair is trading in the negative territory for the fourth consecutive session. It also seems all set to prolong its recent pullback from the 0.7100 marks. Traders now look forward to the new U.S. data, including ADP report on private-sector employment, Pending Home Sales, and Chicago PMI.

However, the key focus remains on Friday’s U.S. monthly jobs report (NFP). It could determine the agency’s near-term monetary policy outlook, as well as influence the USD price dynamics. That, in turn, would play a key role in deciding the NZD/USD pair’s direction.

 

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