The Euro was under pressure during Monday’s trading session, with prices sinking towards 1.2230 amid an appreciating U.S Dollar.
Investors will most likely direct their attention towards the European Central Bank meeting this week where policymakers are expected to signal no change in monetary policy. However, the Euro could be exposed to downside risks if ECB chief Mario Draghi adopts a cautious tone during the post-meeting press conference. Taking a look at the technical picture, the EURUSD remains in a wide range on the monthly charts, with support at 1.2200 and resistance at 1.2500. The Daily picture is looking increasingly bearish and prices are sinking towards the 1.2200 level. With the Dollar appreciating and the Euro weighed down by low inflation fears, there is scope for the EURUSD to challenge 1.2200 and lower. A solid breakdown below this support could encourage a decline towards 1.2170 and 1.2150, respectively.
Sterling sinks to five-week low
Sterling bulls were nowhere to be found today as investors continued to question the possibility of a UK interest rate hike in May.
An appreciating Dollar worsened matters for the GBPUSD with pricing sinking to a five-week low of 1.3950 as of writing. With falling inflation, disappointing retail sales and a dovish Carney instilling Pound bears with a renewed sense of confidence, further downside could be on the cards for the GBPUSD. From a technical, the currency pair is turning increasingly bearish on the daily charts. The breakdown below the pivotal 1.4000 support level could encourage a decline towards 1.3920 and 1.3800, respectively. For bulls to jump back into the game, the GBPUSD needs to secure a daily close back above 1.4000.
King Dollar enters the scene
The Dollar has rallied to a seven-week high against a basket of major currencies thanks to rising U.S bond yields.
Market expectation of higher US interest rates is another factor behind the currency’s appreciation with the Dollar Index jumping towards 90.71 as of writing. From a technical standpoint, the Dollar Index could turn firmly bullish on the daily charts if prices are able to breach above 91.00. A daily close above 91.00 could result in a rally towards 91.80. Alternatively, if bulls run out of momentum and prices sink back below 90.25, the next key levels of interest will be at 90.00 and 89.50.
Commodity spotlight – Gold
An aggressively appreciating Dollar has eroded appetite for Gold with prices sinking towards $1328 as of writing.
While the yellow metal could depreciate further amid a resurgent Dollar, it still remains confined within a $60 range. With conflicting fundamental themes driving the yellow metal, prices are likely to continue bouncing between the $1300 support and $1360 resistance level. Focusing on the daily charts, a breakdown below the $1324 level could encourage a selloff towards $1300. In an alternative scenario, if bulls are able to keep prices above the $1324 support level, the metal could re-bound back towards $1340.
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