July 01, 2021
EUR/USD: EUR/USD kept declining for the third day in a row and reached 1.1840, its lowest intraday level since the beginning of April. The bulls seized support rapidly and tried to pull back. However, the euro remains under pressure, attempting to hold above the 1.1850 support level. The US dollar grew against all majors during the American session at the end of the month. The ADP employment report, the key economic report released on Wednesday, was better than expected and showed an increase in private payrolls. Jobless claims data is going to be published today, and the NFP report on Friday. Comments from Fed’s Kaplan also helped the US dollar during the trading session. He said he was ready to taper as soon as possible “because of questions about efficacy and side effects.” In this scenario, if EUR/USD successfully breaks the 1.1850 support, we expect it to be pushed further down to the 1.17 mark.
USD/JPY: USD/JPY interrupted its 4-day bearish rally, having recovered all losses of the previous days. The strong buying sentiment in the US dollar took USD/JPY to the sixteen-month-high. The move was definitely caused by the strong buying pressure in the US Dollar. Investors avoided risky instruments and shifted to the US dollar due to fears concerning the spread of the highly transmissible COVID-19’s delta variant. On the other hand, the Japanese yen remains bearish as investors increase their positions in the US dollar. The sentiment deteriorated after Japan’s Unemployment rate rose 3% in May. Meanwhile, the Consumer Confidence Index in Japan jumped to the strongest numbers since February 2020 in June. As for now, investors are waiting for US Initial Jobless Claims to evaluate the market sentiment, while Japan Tankan Large Manufacturers Index came in weaker than expected.
WTI: WTI oil approached $73.5 at the end of the US trading session and has firmed into the Asian session. However, the price lost some early gains after the Energy Information Administration’s weekly report failed to confirm an 8.2-million barrel decrease in US inventories reported a day earlier. According to EIA data, inventories at Cushing, the delivery point for WTI, decreased to their lowest level since March 2020. Later today, OPEC+ will decide if it will add new supply to the market in the next month or not, while most market participants expect it to add at least 0.5-million barrels per day to cover rising demand. The group will discuss the extension of its oil cut deal beyond April 2022. OPEC Secretary General said on Tuesday that demand is expected to rise by 6 million bpd this year, with 5 million bpd of that coming in the second half of the year.