The US dollar has surged to levels unseen since April after the Fed's decision back on Wednesday. Gold has reversed up from the local dips. Still, this week was the worst for gold in more than a year.
USD rose on market uncertainty
- The week has started with mixed market sentiment. Coronavirus cases continue rising, especially in Europe, where countries have been forced to impose restrictions, but have still avoided full lockdowns. Therefore, there are some chances that the economic recovery will slow down in that area. The situation in the USA isn’t better as the record number of new infections was recorded on Saturday: 82 668.
- The stimulus talks between Democrats and Republicans keep going, showing some progress. However, the deal won’t be reached until after the election.
- As for the Brexit front, hopes were rising, but then the situation got worse as the French president threatened to ruin the Brexit deal, if French fishermen are negatively impacted. Some reports showed that the compromise between France and the UK is near.
EUR/USD is trading inside of the ascending channel. It approaches its upper trendline, that’s why we can expect some sort of falling ahead of the further rising. Pay close attention to 1.1800 as it may reverse from it and start moving up. If it manages to break the resistance of 1.1860, the way to the key psychological mark of 1.1900 will be clear.
The British pound is edging lower. The move below the 50-day moving average of 1.3000 will drive GBP/USD to October’s lows of 1.2870. But again, we can anticipate the reverse to occur here as the 1.3000 level has been acting as strong support. If it bounces off it, the way to the recent high of 1.3150 will be clear.
Gold reversed from the upper trendline and has been declining for the third day. The move below the recent low of $1 890 will push XAU/USD to the low of October 6 at $1 875. In the opposite scenario, if it rises above the recent highs of $1 912, the doors towards the next resistance of $1 925 will be open.
Finally, let’s talk about the S&P 500. It entered the descending channel. If it drops below the key support of 3 400, the way to 3 385 will be open. Otherwise, the move above the 100-period moving average of 3 440 will push the stock index to the high of October 23 at 3 460.
Great Britain will release retail sales for May on June 18, at 09:00 MT time. One cannot underestimate the importance of this indicator.
The Fed made a hawkish surprise! The bank would start a discussion about scaling back bond purchases. Besides, it is likely to make two interest-rate increases by the end of 2023 (sooner than expected)!
Wednesday will please traders as many economic indicators will be out! The USA, UK, and Euro Area will release PMI reports on June 23 from 10:15 to 16:45 MT.
The Bank of England will release its statement and announce its monetary policy decision at 14:00 MT.
Last week the USD soared versus other major currencies, while gold headed for the biggest weekly loss in 15 months. Let’s see what new moves await us this week!