Gold dropped, market awaits Fed meeting on Wednesday

What you need to know on Monday:

Bitcoin rose to almost $40,000 after Elon Musk said that he would allow paying for Tesla in Bitcoin if mining is done with more clean energy.
The USD is going to be in the spotlight again this week as the Federal Reserve will hold a meeting on Wednesday, which could be a big mover! Most analysts expect the central bank to stay dovish. Still, the Fed can project an interest rate increase in 2023, which will be positive for the USD.
Gold has plunged amid the stronger US dollar as investors await the Fed’s meeting this week.
The oil keeps rallying up. XBR/USD (UK Brent oil) has reached the level unseen since May of 2019!
UK Prime Minister Boris Johnson is expected to delay the economy reopening, which can negatively impact the pound.

Technical outlook

EUR/USD is moving inside the descending channel. If the pair drops to the mid-May low at 1.2060, it’s likely to reverse up from that level as 1.2060 is a quite strong support level, which the pair has failed to cross several times already. The breakout will open the doors to the early-May lows at 1.2000. On the flip side, if it jumps above the high of June 3 at 1.2130, it may rally up to the 200-period moving average of 1.2150.

In the long term, GBP/USD is moving in an uptrend inside the descending channel, nicely supported by the 100-day moving average. In the short term, it’s trading back and forth inside the horizontal corridor. Thus, there are two possible scenarios. The pair breaks the 1.4085 support and drops to the lower trend line and the 50-day moving average of 1.4000, which it’s unlikely to cross on the first try. The pair may reverse up at that level. In the opposite scenario, the move above the 1.4200-1.4250 resistance zone will drive the pair to the next round number of 1.4500.

XAU/USD has dropped below the lower trend line. The 200-period moving average of $1855 should stop the metal from falling deeper. So, we might see the reverse up from that level. The breakout may push XAU/USD to May lows of $1825.

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Kseniia Medik

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