The US dollar extended declines for a second consecutive day. Economic data on the day was focused on the PCE and personal spending income reports. The Fed meeting due on Wednesday is also weighing on the USD. Meanwhile, the US and China trade talks are progressing.
Officials from Washington note that the trade talks are in the final stages. While this led to a risk on sentiment in the market, the USD remained on the backfoot. End of month portfolio rebalancing could possibly lead to the USD pushing higher in the short term.
Euro Extends Gains as Dollar Weakens
The common currency recovered from last week’s losses. The euro gained 0.37% on Monday. The gains came mostly on a weaker greenback. The US core PCE price index came out flat on the month. Personal spending and income outlays also rose less than forecast, increasing by 0.1% on both counts.
Can the EURUSD Extend the Gains?
The common currency managed to bounce higher after price cleared 1.1140 to establish support. Price briefly dipped to this level on Monday before continuing to push higher on the day. With the recently breached support level at 1.1226, we expect the common currency to establish resistance at this level in the near term.
Oil Prices Remain Under Pressure
Crude oil prices recovered from Friday’s losses, but the downside pressure persists. On Monday, President Trump tweeted that he demanded OPEC to raise supply. He said that Saudi Arabia and other OPEC nations were in agreement. US Secretary of State Mike Pompeo said that the US is taking all measures to ensure supply is not disrupted after Iran’s oil waivers end tomorrow.
WTI Holds on to the Support
Crude oil prices bounced off the support level formed at 62.85 level. However, price action remains weak to the upside. The API crude oil inventory report, due out later today could provide some catalyst to the price action. The resistance level at 64.55 is the likely target to the upside. To the downside, a break down below the support of 62.85 will see crude oil extending declines lower.
Gold Holds Steady Ahead of Fed Meeting
Gold prices were seen trading within the range in a holding pattern ahead of the start of the two-day FOMC meeting today. The outlook for Fed officials remains a lot more clouded amid latest inflation figures showing practically no price pressures. Meanwhile, the economy continues to rise at a steady pace with the labor market remaining the cornerstone of growth.
Will XAUUSD Continue to Consolidate?
Gold prices extended declines, but the daily price action was steady within Friday’s range. This could potentially see prices holding steady ahead of the Fed meeting due on Wednesday. XAUUSD continues to remain buoyed to the upside by the 200-day moving average. As XAUUSD forms the resistance at 1285, price action remains flat for the moment. But a breakout is likely in either direction.