As a result, the forex pairs to watch this week were left to negative global sentiments emanating from the increasing coronavirus fears and economic impacts.
Later in the week, hopes on the virus treatment ignited positive global sentiments to counteract the negative moods.
Other factors also played a minor role in the forex forecast. For in-depth analysis, read the rest of this article.
Fundamentals that Affect Currency Analysis Forecast this Week
Positive Sentiments
As sentiments turned positive investors favored the riskier markets shunning the safe-haven currencies.
Hopes on coronavirus treatment generated positive global sentiments on Friday, offsetting the negative forex forecast resulting from coronavirus pandemic fears and their impacts on world economies.
Gilead announced that remdesivir COVID 19 treatment significantly reduces mortality risks of coronavirus.
Earlier in the week, China recorded an improved economy uplifting the market forecast.
The performance of China and the world economy, in general, affect the performance of commodity-related currency pairs.
Negative Sentiments
Forex forecast news in the drop of the American equities amid worries of the global coronavirus pandemic impact on world economies had investors scared, resulting in risk aversion measures.
As the threat of COVID 19 pandemics continues, globally confirmed cases hit 12.9 million as on Sunday, 12thJuly.
Fatalities over half a million while recoveries were 7.5 million.
In reaction to the increasing coronavirus fears, investors favored the safe-haven forex pairs to watch this week.
Weekly, coronavirus increased globally by 1.43 million this week up from a previous increase of 1.29 million.
Geopolitical Tensions
Geopolitical tensions continue to simmer as the US announced postponed vengeful measures against Franceover its digital services tax, reported by Robert Lighthizer, US Trade representative.
The China-US trade tensions were reignited on Friday as US President Donald Trump indicated that the phase 2 trade deal is no longer a priority.
Furthermore, he said that its relationship with China had been “severely damaged” by the COVID 19 global pandemics.
Trump blames China for the global mess caused by the virus and its failure to stop it from spreading.
In addition to the COVID 19 forex forecast, the geopolitical tensions support the safe-haven currencies as corroborated by this week’s forex currency analysis forecast.
Oil Prices
The performance of oil prices in the global market affects the commodity-sensitive currencies such as the New Zealand and Canadian dollars.
Currency analysis forecast shows that oil prices dropped due to COVID 19 threat and overproduction.
Performance of the G7 currencies
Performance of the forex pairs to watch this week.
| Currency pair | Weeks opening | Weeks closing | average | Percentage change | remarks |
| USD | 96.682 | 96.614 | 96.635 | 0.706 | drop |
| EUR/USD | 1.1309 | 1.1300 | 1.1299 | 0.4534 | drop |
| GBP/USD | 1.2493 | 1.2622 | 1.2575 | 1.0973 | gain |
| USD/JPY | 107.36 | 106.90 | 107.25 | 0.56 | drop |
| USD/CHF | 0.9421 | 0.9410 | 0,9408 | 0.5128 | drop |
| AUD/USD | 0.6974 | 0.6949 | 0.6963 | 0.1080 | drop |
| USD/CAD | 1.3538 | 1.3593 | 1.3567 | 0.3469 | gain |
| USD/NZD | 1.5256 | 1.5221 | 1.5230 | 0.7057 | drop |
USD 3rd Consecutive Week Loss
Currency expectations for this safe haven reserve currency were suppressed by improved economies and positive global sentiment on COVID 19 treatment.
It dropped by 0.706% to close lower at 96.635, having opened the week at 96.682, as shown by the currency analysis forest.
The United States recorded a dropped unemployment rate early in the week, uplifting its currency expectations, according to the currency analysis forecast.
Also, more support came from the increasing cases of coronavirus infections, particularly in the United States of America.
America has a daily average of 52,000 new cases daily but recorded the highest of 63000 new cases on Thursday.
Adding more damage to the dollar, Gilead Sciences announced that remdesivir COVID 19 treatment reduces mortality risks.
Furthermore, positive remarks of the US vice president Pence on COVID 19 negatively affected it.
Pence noted that the coronavirus infection curve was flattening, particularly in the hot spot states.
On Thursday, the greenback recovered its earlier losses in reaction to negative risk sentiments on its equities.
Currency analysis forecast indicates that the American equities dropped amid continued worries on COVID 19 pandemic impact on world economies.
However, on Friday, the dollar lost its currency expectations when risk sentiments turned positive following the Gilead sciences announcement.
The remdesivir COVID 19 treatment drug boosted global hopes in the fight against the virus.
EUR/USD Weeks Ups and Down
The euro rallied on the improved economic outlook and pulled back on coronavirus fears to fluctuate over the week, eventually gaining 0.4534 against the dollar.
It rallied on Monday, Wednesday, and Friday but pulled back on the other days to close at 1.1300.
Counter currency flow was the major price driver for the euro as there were no major price catalysts this week to close on the green.
Most likely, investors analyzed economic outlook and fundamental sentiments to demand the euros.
There was Improved economic data reported by most of its member states, particularly in Italy and France.
Overall, the Euro currency expectations were supported by improved economic updates and increasing optimism as Europe continued to reopen its economies.
GBP/USD Bullish Week
The GBP/USD was the forex pairs to watch this week as they emerged the best despite Brexit talks uncertainty and the coronavirus pandemic and its impact on economies.
Investors most likely speculated on United Kingdom stimulus and broad risk sentiments as revealed by currency analysis forecast.
According to investing.com, the pound opened the week at 1.2493 and closed stronger at 1.2622, attaining an overall gain of 1.0973 % after hitting strong resistance at 1.650.
Except on Thursday, it traded on the green on the other days.
The coronavirus pandemic’s surge and fears pushed the pound downwards on Thursday amid worries of looming new lockdown measures.
On Wednesday, United Kingdom chancellor Rishi Sunak unveiled a 300 billion pounds stimulus package to protect and create millions of jobs in Britain in efforts to combat coronavirus pandemic effects.
Also, Improved economic data and BOE governor monetary policy statement added more strength to the pound.
At the end of the week, sentiments turned positive as Gilead sciences released positive news that remdesivir drug reduces mortality risks from coronavirus pandemic.
This positive global sentiment supported the pound to gain against the safe-haven currencies.
JPY/USD
The Japanese yen’s dramatic improvement towards the end of the week is commendable.
Improved economic data from Japan supported it.
Besides, global risk sentiments turned negative on Friday, boosting the yen as indicated by the currency analysis forecast.
Notably, the yen traded weaker at the beginning of the week on broad positive risk sentiment.
On Wednesday, Japan reported economic data improvement from 23.3 to 38.8 % in June.
The yen pushed strongly against the USD on Thursday on risk aversion measures in reaction to increasing cases of coronavirus and its impact on the economy.
Also, Japan announced plans to reopen travel with other Asian regions, further uplifting the yen against major currencies.
However, the current turned against the yen on Friday as Gilead sciences reported positive news that remdesivir COVID 19 treatment significantly reduces mortality rate.
This positive sentiment pulled the yen downwards.
CHF/USD
Price changes primarily driven by counter currency flows as Switzerland posted no major economic data except for the latest unemployment update.
It’s unemployment rate dropped from 3.4 to 3.2% in June, which resulted in an insignificant price movement of the Swiss franc.
It was very unusual as global risk sentiments also had little impact on the CHF/USD currency pairs.
This currency opened the week at 0.9421 and closed lower at 0.9410 to lose 0.5128%.
Nevertheless, the Swiss franc benefitted a bit from increased cases of COVID 19 on Thursday.
AUD/USD
Global risk sentiments and counter currency flows significantly impacted the Australian dollar’s performance as it struggled towards a 0.7000 psychological level.
However, it lost momentum at the market forecast to settle down at 0.6923 losing 0.1080%.
Forex news of rising cases of coronavirus severely worked against the Aussie to be the week’s net losses.
Furthermore, more damage came from Australia as it gradually reverted to lockdown measures.
According to forex market forecast analysis, this week indicates that the Aussie opened the week stronger supported by good economic data and global positive risk sentiments.
Risk aversion measures by forex investors saw the Australian dollar lose greatly over the week amid rising cases of COVID 19 pandemics.
The positive news from Gilead sciences provided hope for the Aussie but not enough to pull it out of the reds.
CAD/USD
The loonie was the week’s biggest loser even though Canada posted improved economic data.
Foreign exchange currency speculators interpreted oil weakness, poor Canadian business outlook, and the anticipated historical budget deficit to sell the Canadian dollar in favor of the greenback.
Besides, the impact of the coronavirus pandemic on economies and business outlook adversely pressured the Canadian dollar downwards.
Also, this commodity-based currency pair negatively reacted to a drop in oil prices worldwide.
Towards the end of the week, the Canadian dollar received a much-needed boost from a drop in employment rate from 13.7% to 12.3% according to Canadian job updates.
Furthermore, more support came from positive global news from Gilead sciences on its drug to minimize COVID 19 mortality incidences.
However, the above fundamentals were not enough to salvage the loonie from the reds to the greens at the close of the week, according to the currency analysis forecast.
NZD/USD
The New Zealand dollar gained against major currencies over the week.
It was driven by counter currency flow and broad risk sentiment that was mostly positive throughout the week.
Riding on positive risk sentiments, the kiwi opened the week stronger on improved china’s economy.
The dairysector of New Zealand improved as dairy prices registered an 8.3% increase in the global dairy trade auction.
In reaction to negative forex news of the coronavirus pandemic and its impact, investors embarked on risk aversion measures forcing the kiwi to lose steam midweek.
Also, weak economic data and low consumer confidence from New Zealand added more pressure on the NZD/USD currency pairs.
On Friday, the market forecast was uplifted by positive news from Gilead sciences to boost the kiwi.
Must Read: NZDUSD profitable trade with a deeper pullback
Conclusion
The safe-haven currencies performed poorly while the riskier markets showed an improvement, both reacting to the market forecast sentiments differently.
The safe-haven currencies embraced negative forex news while the risk appetite market thrived on the positive sentiments.
Until proper coronavirus treatment is found, fears and economic impacts of the virus will continue to affect the currency analysis forecast.