The mighty Dollar stood tall against a basket of major currencies on Monday, despite a recent pullback in U.S treasury yields.
A better than expected reading on US GDP coupled with expectations of higher US interest rates stimulated appetite towards the Dollar. The bullish sentiment towards the US economy and rising inflation expectations could continue fuelling the current upside. This could be an eventful and action packed trading week with ADP figures, FOMC meeting and the US jobs report all in focus. King Dollar has scope to extend gains if the Fed meeting is more hawkish than anticipated and US jobs reports exceed expectations.
Taking a look at the technical picture, the Dollar Index is heavily bullish on the daily charts.A breakout above 92.00 may result in a further incline higher towards 92.50. Alternatively, if bulls are unable to break above 92.00, prices could retrace back to 91.50.
Sterling stumbles into trade week
Sterling entered the trading week on a back foot as expectations continued to fade over the Bank of England raising UK interest rates in May.
A strengthening Dollar compounded to the downside pressure with the GBPUSD sinking towards 1.37240 as of writing. With the Pound likely to remain weakened by falling UK rate hike bets and the Dollar supported by expectations of higher US interest rates, the GBPUSD remains fundamentally bearish. From a technical standpoint, there have been consistently lower lows and lower highs while the MACD trades to the downside. The decisive break down below 1.3800 could invite a decline towards 1.3700 and 1.3640, respectively.
Euro poised for further downside
Euro bears have marched into the trading week on a mission to punish the EURUSD with prices trading 1.2070 as of writing.
The combination of low inflation concerns in Europe and appreciating Dollar has inspired bears with enough inspiration to conquer the 1.2200 support level. There is a suspicion that the divergence in monetary policy between the ECB and Fed is likely to encourage sellers to send the EURUSD lower. Taking a look at the technical picture, the currency pair is firmly bearish on the daily charts as there have been consistently lower lows and lower highs. A solid daily close below 1.2090 could encourage a decline towards 1.2050 and 1.2000, respectively.
Commodity spotlight – Gold
Gold is likely to remain pressured by an appreciating Dollar and expectations of higher US interest rates. The yellow metal has already depreciated today with prices sinking towards $1313 as of writing. If the current downside momentum holds and bears remain in control, the metal could challenge $1300. Alternatively, a breakout back above $1324 could result in prices testing $1340.
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