The US and China are all set to resume the trade talks starting today. USD continued to rise to a seven-week high ahead of the meetings. The International Monetary Fund lowered the growth forecasts globally citing trade tensions. However, for the US, growth was raised from 2.3% to 2.6% but growth forecasts for China were lowered from 6.3% to 6.2%.
Euro Slips to a Two-Month Low
The common currency extended declines, falling to a two-month low at 1.1140. The Eurozone consumer confidence data showed that the index registered -6.6 in July from -7.2 in June. This was slightly better than the forecasts. The flash manufacturing and services PMI reports are due to come out later today.
Can EURUSD Hold the Declines?
The decline to 1.1140 level came following the breakout from the minor support level at 1.1250. The Stochastics Oscillator is currently oversold and could indicate that the declines are overdone. As a result, there is scope for the currency pair to rebound. However, the gains are likely to be limited to the 1.1250 level which could act as resistance.
UK Parliament Confirms Johnson as the Next PM
The UK’s Conservative party’s leadership race concluded with the appointment of Boris Johnson. Johnson will replace the outgoing prime minister, Theresa May who resigned after failed attempts to deliver Brexit. The markets were widely expecting Johnson to win the race. Elsewhere, BoE’s Andy Haldane, in comments said that the MPC will not be pushing for a rate hike when it meets next week.
Will the GBPUSD Rebound off the Two-Year Lows?
The pound sterling is trading near a two-year low for the most part since last week. The currency pair initially bounced off the lows with price action in the past few sessions showing a strong consolidation. The resistance area of 1.2481 remains key. A close above this level could signal some kind of a bullish bias.
Gold Prices Await Cues from the ECB
The precious metal closed in the red on Tuesday, marking the third day of declines. With prices closing back below the recent breakout levels, the precious metal awaits cues from the ECB’s meeting tomorrow. The dovish forward guidance from the ECB is likely to see gold prices waiting to breakout higher once again.
XAUUSD to Remain Muted in the Short Term
With the US and China trade talks, alongside the ECB meeting tomorrow, gold is likely to remain flat in the short term. However, the rebound to the recently held support level at 1431–1428 remains key. If resistance is formed here, we could expect price action to drift lower. The support at 1404 region will be key as it could post further declines if the support level breaks.