Last week was full of surprises! The US dollar plunged despite a better-than-expected retail sales report…
USD drops ahead of Fed meeting
- The US dollar keeps dipping further, while riskier assets are rising as investors await the FOMC meeting at 21:00 MT time. Most analysts expect that the central bank will increase its bond-buying program, which will push the USD down. On the flip side, the Fed may keep the status quo as the vaccine distribution has already started.
- The GBP surged without any progress in the Brexit deal. The EU-UK sides keep negotiating, that’s why there are still hopes that the agreement can be done soon.
- Gold has broken through $1 850 and keeps edging higher as the Fed is expected to ease policy, which in turn will lead to the weaker US dollar.
- The day will be full of economic releases! The most important releases are the EU PMI at 11:00 MT time, the UK PMI half an hour later, then US core retail sales at 15:30 MT time, and the US PMI at 16:45, and finally the last FOMC meeting this year at 21:00 MT time.
- How to trade PMI and retail sales? Compare actual numbers and forecasts. If actual numbers are better than forecasts, a currency will rise. If worse – a currency will drop.
Watch our daily trading plan!
EUR/USD approaches the key resistance of 1.2170. It’s unlikely to cross it by the first attempt as it has failed to cross it several times. That’s why we can expect the price to pull back rather than break out. If it manages to break this level through, the way up to the next round number of 1.2200 will be clear. Support levels are at the 50-period moving average of 1.2130 and at the low of December 11 at 1.2110.
The pound is rising due to the weak USD. If it manages to break the key psychological mark of 1.3500, the doors towards the high of December 4 at 1.3545 will be open. On the flip side, if GBP/USD dips below the support of 1.3400, the way down to the next one of 1.3300 will be clear.
XAU/USD gets closer to the 50-day moving average of $1 870. The price will struggle to cross it, so we can await a retracement. If it breaks this level finally, gold may jump to the next resistance of $1 890. Support levels are at yesterday’s low of $1 825 and the 200-day moving average of $1 810.
USD/CAD is moving in a descending channel. If it crosses the support at yesterday’s low of 1.2700, the way down to the next round number of 1.2650 will be clear. Resistance levels are at the 50-period moving average of 1.2775 and 1.2820.
Last week was very interesting for the markets, as we saw the releases of the US Inflation and Disney’s earnings report. So let's see what we should await this week!
The volatility that the markets experienced last week promises the second tidal wave! What should your favorite assets anticipate during the first week of February?
The US Markit will publish Flash Manufacturing and Flash Services PMIs (purchasing managers' indices) on June 23 at 16:45 GMT+3.
The Fed Chair Jerome Powell will testify on the Semi-Annual Monetary Policy Report before the House Financial Services Committee on June 22-23 at 17:00 GMT+3.
Canada will publish Retail Sales and Core Retail Sales on June 21 at 15:30 GMT+3.