The US index has traded lower over the European session on Monday, trading back down to retest the broken 97.68 level. Price traded higher into the end of last week on positive US data surprises.
Traders will be keen to hear the Fed’s latest assessment at the upcoming FOMC meeting this week for any signs that a 2019 rate hike could still be forthcoming. Looking ahead to today’s US session, traders are waiting on March PCE data which, given its importance to the Fed, could be very market moving.
EUR Rallies on USD Weakness
EURUSD has been a little higher this morning on the back of USD weakness. Price is fighting to get back above the broken 1.1175 low. Eurozone economic concerns continue to keep EUR trading heavily with focus remaining on an eventual break lower in the near term.
BOE in Focus
GBPUSD is tracking the moves in EUR this morning, moving higher as the dollar retracement continues. The key focus for traders this week will be the BOE meeting due on Thursday. This is likely to see the BOE reiterating its message of frustration regarding ongoing Brexit uncertainty and the need to keep rates on hold. This should keep GBPUSD pressured toward the 1.28 level over the week barring any surprise comments from the BOE.
Risk Remains Buoyant
Risk sentiment has started the week firmly with SPX500 rallying above the 2939.87 level in early trading on Monday, though we have since seen some retracement. Commentary over the weekend regarding the likelihood of a US/Japan trade deal has compounded the sense of optimism around ongoing US/China trade talks, keeping sentiment buoyant.
Safe Havens Down On Risk Rally
Safe havens have not had such a good start to the week with both gold and JPY down against USD despite USD weakness. XAUUSD has traded back down to test the 1280.58 support today, which for now is holding. USDJPY is trading slightly higher today though remains well under the 112.16 resistance which remains the key upside level to break.
Crude Holding On
Oil prices have managed to just about stay in the green so far today despite the heavy sell-off last week in response to news that President Trump has contacted OPEC asking for the oil cartel to increase its production in a bid to lower oil prices. While there is little to suggest the group will honor Trump’s request, the news was enough to provoke a long covering sell-off. Price broke sharply back below the 64.38 level, though still above the 61.88 support.
Commodity Currencies Mixed
The selloff in oil has been a strong negative catalyst for the Canadian dollar price action with USDCAD rocketing above 1.3377 and 1.3467 last week. Price remains above the latter level over early trading today following a rally across the European morning.
Despite the sell-off in oil, it seems that AUD traders are remaining positive given the optimistic tone of commentary around Chinese and Japanese trade talks with the US. AUDUSD has managed to stay above the .7021 level for now despite briefly piercing below last week.