General risk sentiment continues to drive foreign exchange markets. The yen, Swiss franc, and dollar declined after the early recovery in the prior session. On the other hand, the Australian dollar is the leading commodity currency and the pound sterling is recovering. However, over the previous week, the dollar and yen were still showing the biggest gains, while the Australian dollar and kiwi were the weakest.
Meanwhile, at the start of a new week, the situation may change, especially as Sterling climbs the stairs. However, economic data will also be in the spotlight again. Look first at the 1.3800 minor resistance in the GBP/USD pair, which will indicate the completion of the correction from 1.4240. “The unemployment rate will likely rise slightly from here, but not as much as predicted in February,” BoE politician Michael Saunders said Friday.
While the outperforming pound sterling on Friday helped push the pound/dollar pair back above 1.3750, the gains market observers attribute to signs of easing UK and EU vaccine tensions, Friday’s recovery seems to have more to do with the dollar side of the course. equations.
Despite the rise in US government bond yields (the 10-year bond yield rose nearly 5 basis points to 1.65%), which has supported the US dollar in recent weeks, the dollar showed more consolidated trading on Friday, with the DXY falling from weekly highs around 92.90 amid a significant improvement in the market’s risk sentiment (global equities, commodities, and risk-sensitive currencies mostly rose).
The focus this week is on the sell-off in Swiss francs and yen. But the forex markets are heterogeneous. The growth of the USD/CHF pair from 0.8756 resumed after breaking through the resistance of 0.9374. Further gains are expected this week, while support at 0.9212 holds. the next target is a 61.8% retracement from 0.9901 to 0.8756 at 0.9464.
The next break will see resistance at 0.9901. On the other hand, a break of 0.9212 support is needed to confirm a near-term high. Otherwise, the forecast will remain moderately optimistic in the event of a retreat.
The USD/JPY pair resumed its growth from 102.58 after breaking through the resistance of 109.35 last week. Initial bias remains towards longer-term channel resistance at 110.00 this week. A decisive break in this area will have more bullish overtones and the next resistance level will be at 111.71. On the other hand, a break of 108.40 support is needed to mark a short-term peak. Otherwise, in the case of retreat, the prospects will remain optimistic.
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