The US dollar was seen trading mixed, although the dollar index was seen trading weaker. Lack of economic data and fresh news on the trade narrative kept prices mostly subdued on the day. Investors weigh in on the prospects of a Fed rate cut. The Fed is due to meet next week.
Euro Maintains Gains on Weak USD
The single currency was seen holding on to its gains on Monday. Lack of economic data from the Eurozone saw most of the flows due to a weaker USD. Following Friday’s weak jobs report, the dollar attempted to rise to intraday highs before giving up those gains.
Can the EURUSD Continue to Trend Higher?
The currency pair initially slipped on Monday’s open, but price was seen recovering by the day’s close. EURUSD will need to close above the recent pivot highs of 1.1338 in order to post further upside in price. With the Stochastic Oscillator looking bullish, this could be the short-term bias for the moment. The upside target is seen at 1.1400.
Sterling Slumps on Weak GDP Data
The British pound fell on the day as economic data showed a second month of GDP contracting. Missing estimates of a 0.1% decline, the gross domestic product fell 0.4% on the month in April. Manufacturing data was also weaker, falling 3.9% on the month. This was more than the estimates of a 1.1% decline. Focus will shift to the monthly jobs report due later today. The average earnings index is forecast to slow to a pace of 2.9% from 3.2% previously.
GBPUSD to Continue Trading Sideways
The currency pair briefly ticked higher as it broke past the upper range of 1.2716. However, price slipped back into the range on Monday. The Stochastic Oscillator is seen to be bullish which could potentially signal the upside bias. GBPUSD will need to close strongly above 1.2716 in order for any further upside. To the downside, the lower end of the range at 1.2606 remains in place.
Gold Slips as Risk Appetite Returns
Gold prices were seen trading lower as investor’s risk appetite returned. The prospects of a possible rate cut by the Fed sometime this year led equity markets higher. At the same time, lack of any new developments from the US and China trade talks also helped sentiment. With the US now pulling back on its trade threats to Mexico, the global uncertainty is seen to be somewhat stable.
XAUUSD on Track to Test the Support
The precious metal was seen giving up most of the gains on Monday. Price gapped lower on the open and continued to extend declines through the day. This puts price action in gold within reach to test the 1320 level of support. Establishing support at this level could however keep the medium-term bias to the upside. A close below 1320 could, however, spell further declines that could see gold testing the lower support at 1290–1285.