The US dollar was seen posting gains on Monday. This came after President Trump brought about fresh optimism of trade talks with China. Speaking at the G7 summit, Trump said that talks with China were more meaningful. However, there was some confusion as Trump’s claims about China wanting to get back to trade negotiations were rebuffed by officials from China.
German Ifo Business Confidence Slips to 7-year Lows
In what could be more trouble for Germany, the latest Ifo business survey fell to the lowest level since 2012. The business index fell to 94.3, following a revised 95.8 in July. The data missed estimates of 95.1. The declines come in the backdrop of the German economy contracting 0.1% in the second quarter.
EURUSD Fails to Break Resistance at 1.1140
The currency pair failed to capitalize on the gains after it briefly rose above the resistance level of 1.1140. Failure to close higher has led the common currency to extend its declines. Price is currently trading back within the range of 1.1140 and 1.1065. However, the bias remains to the upside for the moment. Unless there is a strong breakdown below 1.1065, we expect the EURUSD to attempt breaking the resistance level once again.
Pound Gives Up Gains on Stronger USD
The British pound closed bearish on Monday. The declines came amid a quiet session with a lack of any fundamentals from the UK. As a result, the stronger USD pushed the sterling lower on the day. Furthermore, the initial optimism on the Brexit deal following comments from Chancellor Merkel also faded. Investors questions whether Merkel’s comments reflected the official stance of the EU.
GBPUSD to Correct Lower in Short Term
The currency pair turned bearish after it briefly rose to a three-week high. The current declines come amid a hidden bearish divergence on the daily chart time frame. The recently breached resistance area of 1.2170 is likely to be tested for support. If the support level holds, we expect to see the GBPUSD attempting to push higher once again. The upside target remains at 1.2511.
Gold Gives Back Gains as Investor Nerves Calm
The precious metal gapped higher on Monday following strong rhetoric from President Trump. However, the precious metal gave up the gains rather quickly after Trump took a softer stance on China. Furthermore, the better than expected durable goods orders report also helped gold prices settle lower on the day.
XAUUSD Likely to Retest the Breakout Level
Following the gains on Monday, the precious metal has been trending lower. We expect this current retracement to stall near the breakout level. The previously established resistance level at 1508 remains key to the downside. XAUUSD is likely to test this level in the near term. A rebound off this level will potentially keep the upside momentum intact in gold.