CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

Forex news: Yen and Swiss franc draw safe-haven flows as the US enters a recession and Europe falters

By Piero Cingari

15:10, 28 July 2022

safe haven
Safe-haven concept amid growing economic uncertainties – Photo: Shutterstock

Volatility erupted in the forex market after the US officially entered a technical recession in the second quarter of 2022 and Europe's energy crisis keeps inflation sticky high. This followed the Fed's second consecutive 75-basis-point hike, for the first time since the Paul Volcker’s tenure in the early 1980s.

Today, currency flows shifted to the Japanese yen (JPY), which confirmed its role as a recession hedge by outperforming the dollar by 1.5%. USD/JPY tumbled to ¥134.4 breaking below month-to-date lows at the European market close.

The Swiss Franc (CHF) also appreciated amid rising safe-haven flows, gaining 0.5% and 0.8% against the U.S. dollar (USD/CHF) and the euro (EUR/CHF), respectively.

The greenback (DXY index) had a quite volatile session, first surging towards the resistance at 107 levels, only to see a pullback in the 106.4-106.5 range after the release of negative American GDP data.

The euro (EUR/USD) retraced to 1,016 (-0.4% on the day) after hitting an intraday high of 1,023 at the start of day. Negative macro prints for the Eurozone affected the sentiment towards the single currency, as we explain below.

Growth concerns weighed on commodity-related currencies. WTI oil fell slightly down on the day (-0.7%), failing to break through the $100 a barrel resistance level. After recording a gain of 1.7% the previous day against the dollar, the Norwegian krone (NOK) dropped by 0. 4% today. The Australian dollar (AUD/USD) also fell by 0.4%, and the Canadian dollar (CAD) slipped by 0.3%. 

What is your sentiment on USD/JPY?

Vote to see Traders sentiment!

Currency strength matrix - July 28, 2022

A forex table that compares nine major currencies against each other, including USD, EUR, GBY, JPY, CHF, AUD, NZD, CAD and NOKCurrency strength matrix - July 28, 2022 (16:30 UTC) – Photo:

USD/JPY live chart (US dollar-to-Japanese yen exchange rate)

EUR/USD update: German yields fall more than US Treasuries, widening the US/EU rate gap

Let's start with the slew of negative news affecting the Eurozone.


147.13 Price
-0.270% 1D Chg, %
Long position overnight fee 0.0111%
Short position overnight fee -0.0194%
Overnight fee time 22:00 (UTC)
Spread 0.010


0.66 Price
-0.070% 1D Chg, %
Long position overnight fee -0.0071%
Short position overnight fee -0.0011%
Overnight fee time 22:00 (UTC)
Spread 0.00006


1.10 Price
+0.070% 1D Chg, %
Long position overnight fee -0.0080%
Short position overnight fee -0.0002%
Overnight fee time 22:00 (UTC)
Spread 0.00006


0.66 Price
-0.070% 1D Chg, %
Long position overnight fee -0.0071%
Short position overnight fee -0.0011%
Overnight fee time 22:00 (UTC)
Spread 0.00006

The Eurozone economic sentiment indicator (ESI) fell for the fifth month in a row in July 2022, to 99, the lowest since February of last year, down from 103.5 in June and falling short of market expectations of 102. In the past, the ESI falling below 100 was a very reliable predictor of a recession in the Eurozone.

Annual inflation in Germany slightly fell to 7.5% in July 2022, from 7.6% in June, despite markets expecting a lower 7.4% reading, but remaining still near its multi-decade highs. On a monthly basis, inflation rose 0.9% mom in July 2022, following a 0.1% increase in June and exceeding market expectations of 0.6%.

German yields plummeted by 23 basis points on the day for the 2-year maturity to 0.22% and by 15 basis points for the 10-year Bund to 0.80% due to fears of a looming Eurozone's recession.

The United States enters a technical recession in the second quarter, as preliminary GDP estimates indicate that the economy contracted by 0.9% (quarter on quarter annualized rate), compared to +0.5% expected and a decrease of 1.6% in the previous quarter. Treasury yields fell 10 basis points across the curve, with the 2-year yield at 2.9 percent and the 10-year yield at 2.66 percent, as the market repriced future interest rate hikes.

According to CME Group's latest Fedwatch tool, investors are currently pricing in a Fed funds rate of around 3.3% at the end of the year and early 2023, followed by a rate cut in the first half of 2023.

The short-term yield differential between the US and Europe is widening, as the market believes the ECB will have to stop raising interest rates much sooner than the Fed. If this trend continues, it might put further downward pressure on the EUR/USD exchange rate. 

Chart of the day: EUR/USD and US/Germany short-term yield spread

a chart showing EUR/USD vs 2-year yield spread between US and GermanyEUR/USD vs 2-year yields differential between US and Germany – Photo: / Source: Tradingview

Performance of forex pairs as of July 28, 2022

A forex table showing the performance of US dollar and the euro against other currenciesPerformance of forex pairs as of July 28, 2022 (16:30 UTC) – Photo:

Markets in this article

0.66427 USD
-0.00049 -0.070%
1.10001 USD
0.00078 +0.070%
Oil - Crude
Crude Oil
76.562 USD
-0.023 -0.030%
US Dollar Index
102.275 USD
-0.113 -0.110%
1.35524 USD
-0.0023 -0.170%

Rate this article

Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?

Join the 570.000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading