Last week, the focus was on the Japanese Yen as it hit multi-decade lows, remaining the worst-performing currency. Despite the decline, Japanese authorities did not intervene directly in the markets but the looming threat of intervention kept traders cautious.
On the other hand, the Australian dollar emerged as the strongest performer, fueled by speculations of another RBA rate hike after robust inflation data. The Canadian dollar also showed strength due to strong inflation figures, placing it in the third spot. Euro, recovering from political uncertainties in France, became the second strongest currency of the week.
However, the Swiss franc and New Zealand Dollar struggled, ending as weak performers. The Dollar and British Pound finished in middle positions, with market participants cautious due to upcoming election risks in France and economic data in the US.
The Yen hit a 38-year low against the Dollar, prompting concerns and verbal interventions from Japanese authorities. Japan appointed a new top currency diplomat, Atsushi Mimura, whose approach to stabilizing the currency is closely watched.
The Yen also slid significantly against the Aussie and Loonie, with speculations of potential rate hikes by the RBA. Similarly, the Yen fell to its lowest level against the Canadian dollar in over 15 years, driven by unexpected acceleration in Canadian inflation.
Despite uncertainties in the French elections, the Euro showed resilience as political risks heightened. The CAC 40 and DAX experienced selling pressure, with technical indicators signaling potential downtrends.
The Dollar remained indecisive against other currencies, with traders looking beyond September for the first rate cut by the Fed. While the Dollar Index rebounded, the momentum was uncertain due to EUR/USD’s range-bound movement.
In the GBP/USD pair, a fall from 1.2859 continued, with further decline expected unless resistance at 1.2702 is breached. The overall corrective pattern suggests a potential downward trend, with key support levels to watch.
In conclusion, the forex market saw significant movements last week, with currencies reacting to global economic data and political uncertainties. Market participants remain cautious as central banks navigate through inflation pressures and geopolitical risks. The coming weeks will be crucial in determining the direction of major currency pairs.