This week, the greenback is seen fighting back, although its gains have been slight. It has been most apparent with the EUR/USD. Against the USD/JPY, it is simply holding the Japanese yen from further gains. It also gained insignificantly against the Sterling. Against the AUD and CAD however, the USD actually continued to lose. These mixed results suggest that even though the USD is fighting back, it may still be weak, with the Euro even weaker. Let's take a look at this week's action, and see what we can anticipate.

This week, the greenback continued to weaken after fighting back a bit last to end last week and the start of this week. However, we saw it slide across the board. Even more pressured were the CAD and AUD. Perhaps global growth concerns are stabilizing the EUR and GBP which has been almost singled out in April and May. The Japanese yen on the other hand is benefiting from this risk aversion.

This week, the greenback started with a bang. However after the FOMC announcement, which puts a lid on interest hike prospects, dimmed the USD gains. By Friday, the USD has lost most of the gains from earlier in the week. The yen held its gains better. Commodity currencies such as CAD and AUD also started the week strong, but reversed these gains into losses by Friday. Let's take a look.

The risk sentiments in the global markets stabilized this week after sliding last week. We saw the Japanese Yen and the Greenback lose some of its flight to safety appeal. Friday saw some of this fizzle but both currencies were still pressured within this week's context. The GBP however was hit on Friday, as it posted poor manufacturing data. Let's take a look at what we can expect next week.

Markets review

According to a survey the fed officials will do their part to spur the economic growth by keeping interest rates near zero after their two-day meeting this week.

Risk rally is done

Last week's lead bullet point was that the risk rally had stalled, for the moment. Lacking any solid technical indications of a reversal, we could only highlight potential for an upcoming correction in risk assets. This week, however, we have no such hesitation and a plethora of technical evidence that a multi-week top in the risk rally has been made.

EUR/USD

Resistance: 1,5030-35/ 1,5060-70/ 1,5100/ 1,5130/ 1,5160-70
Support : 1,5000/ 1,4960-70/ 1,4900-10/ 1,4870/ 1,4830-40/ 1,4800/ 1,4750

Market Outlook:

• GBP has been the star performer this week as short covering and speculation of a pause in QE by the BoE have helped sterling to catch up with other pro-risk currencies. The rally in GBP spot has been accompanied by a spike in short dated volatility and a jump in GBP risk reversals to a two-month high.
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The dollar rose against most major currencies on Friday as risk appetite moderated and stocks fell. US industrial production rose strongly, but consumer sentiment declined modestly. The S&P 500 index fell 8.88 points to 1,087.68 on disappointing earnings announcements from Bank of America and GE. The yen fell for a second day. The euro declined for the first time this week; eurozone exports dropped the most in seven months and EU officials expressed concerns over the euro's strength and the dollar's weakness.