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Weekly Situation in the FX markets

bank of england meeting
bank of england meeting
Photo by WPA Pool/Getty Images

With the holiday in Japan and the economic calendar relatively calm for the remainder of this week, the forex markets are expected to be stable. The major news this week is the fortune-laden earnings report that is due out this week. Major companies like McDonalds will release quarterly earnings, potentially sending the stock and currency markets into a frenzy.

In forex news, the GBP/USD is hovering around the 1.7100 level as traders are worried the Bank of England will be cautious in its upcoming interest rate announcement. After the BoE denied it will issue a dovish statement the pair rebounded to its current price levels.

The Bank of England minutes will be the primary report traders will be on the lookout for this week. Adding to the fire will be the geopolitical tension in Eastern Europe. New sanctions against Russia will certainly impact the German economy, Europe's largest economic.

With this uncertainty, the Euro is vulnerable to a potential downturn in price. With the North American economic calendar barren this week and geopolitical strife on the rise, Euro may be subject to a downside further this week.

There is a growing divergence between U.S. monetary policy and performance against the Eurozone's. Any changes to the USD will likely be from the upcoming earnings reports, equities and commodities.The impact will be felt with the EUR/USD changing its price, currently sitting around 1.3500, finally adding volatility to recently quiet forex markets. Add deflationary pressure in Europe and the impact will likely be felt if economic reports are negative this coming week.