On Monday, the US dollar was seen holding steady near a two-month high. The Fed’s FOMC will begin their two-day meeting starting today. Meanwhile, the US and China trade talks are set to resume. US representatives are expected to meet with their counterparts from Beijing. Investors do not expect to see any major breakthroughs in the trade talks for the moment.
Euro Steady Near a Two-Year Low
The common currency was seen trading within the range established from last week. The currency remains rather muted amid a strong rebound in the U.S. dollar. Economic data on Monday was quiet from the Eurozone. Germany will be releasing the preliminary inflation estimates for July later today.
EURUSD Likely to Remain Near Two-Year Lows
EURUSD currency pair has been trading rather flat near the two-year low. This is supported by the trend line which was tested briefly. Unless there is a strong downside momentum, EURUSD could be seen hovering near the support area of 1.1140 region. Any upside gains will be limited to 1.1188.
Sterling Down Over 1.5% on No-Brexit Deal Concerns
The pound sterling was down over 1.5% on the day on Monday. The declines came after the UK took a hard stance on the Brexit deal with the EU. The Boris Johnson led government said that it is prepared to leave the EU without a deal. The Irish backstop arrangement continues to remain the main sticking point in the negotiation.
GBPUSD Could Slip to 1.20
The sharp declines in the currency pair come after price broke the support level near 1.2400. Following the breakdown from the support, the pair gathered momentum. GBPUSD is trading at 1.2155 at the time of writing. The bearish momentum could eventually push the GBPUSD even lower to the next major support at 1.20.
Gold Extends Modest Gains
The precious metal closed in the green for the second consecutive day. However, price action remains subdued within the range from last Thursday. The Fed meeting is due to start later today and will conclude with the release of the monetary policy statement tomorrow. Investors have fully discounted a quarter-point rate cut at this week’s meeting.
XAUUSD to Hold Steady into Tomorrow’s Fed Meeting
The recent gain in XAUUSD is likely to see prices turning flat in the near term. Besides the Fed meeting, the US and China trade talks also weigh on the markets. Gold has been consolidating within the resistance area of 1431–1428 and the minor rising trend line. A breakout in the near term is likely. Watch for gold to test the 1440 handle in the near term.