July 20, 2021
EUR/USD: EUR/USD stays pressured around 1.18 level at the beginning of the Asian session trading today, which is almost the lowest point since early April. The euro fell against the US dollar on Monday ahead of the European Central Bank’s policy meeting on Thursday. Fears and concerns about the Delta variant of the coronavirus kept investors away from risk. ECB policymakers are set for a showdown as they chart a new policy path, with disagreements on the economic outlook and thus on how much more stimulus, mainly in bond purchases, is needed. According to analysts, the central bank could bring us “a very dovish hold”. Probably there will not be any changes in rates. It will be the first meeting since the new strategy was announced.
USD/JPY: The USD/JPY pair showed a heavy bearish dynamic during the European trading hours and fell to its lowest level in nearly two months at 109.05 yesterday. Rising virus cases cause market participants to flock to safety, away from risk-driven assets. So, investors preferred safe havens such as the US dollar and the Japanese yen. The yen climbed against the dollar on Monday, rising to its highest level since late May. On the other hand, the greenback also attracts investors as a safer alternative against its risk-sensitive counterparts, especially commodity-linked currencies, which partially limits the USD/JPY pair’s downside for now.
Gold: Gold started the new week with a bearish gap as the risk-averse market environment provided a boost to the greenback. Gold inched lower in choppy trading on Monday, as a buoyant dollar offset a slump in Treasury yields to their lowest levels since February. Bears succeeded in testing the 1800 level and even reached 1795. As a result, with US market opening, it took half an hour approximately to recover bullish losses. On Tuesday, Housing Starts and Building Permits figures for June will be featured in the US economic calendar. These data probably will not have a strong impact on risk sentiment, and gold could come under a new wave of bearish pressure in the short term.