USD demand down ahead of Fed meeting

Key Movers

The Japanese yen recorded the largest decline among the majors on Friday, falling 0.34% against the US dollar to open at 110.51. Widely considered to be a 'barometer of fear' the increase in the USDJPY signals a positive turn in risk sentiment on Friday which was also reflected on Wall Street. Adding to the yen’s woes are reports of increasing infections in Japan. While reports of athletes and organizers testing positive to COVID-19 have not stopped the Olympics from moving forward, cases are edging higher and there are concerns that the Olympics will prove to be a super-spreader event. Ultimately, global risk sentiment shrugged off these concerns somewhat on Friday with the yen reversing course and falling against USD. Nevertheless, the pair remains under pressure in relation to COVID-19 headlines. USDJPY was down 0.31% this morning, trading around 110.170.For the euro, some analysts think the single currency seems to be acting as the last bastion of defence against the US dollar which has left no major currency untouched in its recent performance. However EURUSD came off its recent highs to trade around 1.8090 at the time of writing.It is set to be a quiet week ahead for the UK on the data front with little to report. Last week did see the release of retail sales figures which beat market expectations, with some analysts attributing the surge to consumer spending at the Euro Cup. This week, any further upside gains for the pound could be limited by the ongoing dispute over the Northern Ireland protocol.