Dominant Themes within the FX Market to Consider This Week

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  • EUR/USD nears parity once more.
  • USD/JPY hits new yearly peaks.
  • Markets concentrate on the U.S CPI this week.

The Federal Reserve has what it needed to increase the funds’ rate by a 75 basis point in July following last Friday’s non-farm payroll in the U.S. The rate hike will strengthen the United Stated dollar against peers, even after a significant appreciation over the past several months.

For instance, the EUR/USD traded around the 1.0071 lows as last week ended before a slight recovery. However, the pair is back at the lows today, closing into the parity zone. Also, the USD/JPY confirms the United States dollar’s strength. The currency welcomed the trading week steady, trading beyond 137 and recording a new 2022 peak.

These remain the two primary themes to consider this week. Besides that, market players would watch the U.S inflation data.

EUR/USD & Parity Level

The EUR-USD exchange rate remains the most crucial on the Forex dashboard. Thus, the two currencies nearing parity is a massive event within the FX community. The pair hovered at the 1.0071 lows last week before rebounding after Friday’s NFP Report.

However, the rebound was likely technical as the report indicated steadiness in the United States job market. For now, each unemployed American has about two job vacancies, so Fed will unlikely quit its hiking plans.

USD-JPY Run Continues

Besides the EUR-USD flirting with parity, investors should watch the USD/JPY. The pair started the trading week steady regardless of the disturbing news about the assassination of Shinzo Abe, Japanese Prime Minister. Meanwhile, that explains the current pair’s strength, especially with the exchange rate at yearly highs.

All Eyes on This Week’s U.S CPI

The United States will publish June’s inflation data or CPI later this week. Financial analysts expect core inflation, which excluded energy and food prices, at 0.6% month-on-month.

They also predict headline inflation of 1.1% during the timeframe. Any divergence from the anticipated levels would catalyze more volatility within the FX sector. Thus, market players should move with caution until Wednesday.

Stay tuned for the latest financial news.

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