Despite posting some modest losses on the day, the USD was seen holding steady. Economic data on the day saw the NY Fed manufacturing index falling sharply. Losing over 26 points, the regional Fed manufacturing index for New York fell to -8.6 in June. The data release suggested further evidence of a softening US economy. The Fed starts its two-day monetary policy meeting today.
Euro Posts Modest Gains on German GDP Reports
The euro currency posted modest gains on Monday, rising 0.08% on the day. Economic data was sparse as German GDP for the first quarter was confirmed to rise 0.4%. The gains were driven by an increase in household consumption and personal spending. The German central bank, Bundesbank, however, cautioned that growth could contract in the second quarter.
EURUSD Attempts to Rebound
On Monday, the common currency was seen posting modest gains. This came as price action coincided with the dynamic support of the trend line and the horizontal support at 1.1208. A follow through to the upside from here could see EURUSD testing the resistance level of 1.1250. We expect the currency pair to drift sideways within this range ahead of Wednesday’s Fed meeting.
Oil Continues to Drift Lower
WTI Crude oil prices resumed the declines as fundamentals remained soft. Oil prices fell back to the previously marked support area of 51.70 on Monday. The American Petroleum Institute (API) will be releasing the weekly inventory report ahead of the EIA’s report later in the week. Last week’s report from the EIA on global waning demand continues to weigh on oil prices.
WTI Forms a Descending Triangle Pattern
The current price action suggests that crude oil prices are shaping into a descending triangle pattern. The support level at 51.70, therefore, becomes critical at this stage. A breakdown of this support could see oil prices extending the declines lower. Alternately, if the support holds, we could expect an upside breakout. This will likely see oil prices extending gains to the highs of 54.36.
Gold Steady at a Year and a Half Highs
The precious metal closed on Monday, down 0.17%. Trading was subdued on the day as price held steady near a year and a half highs. Lack of major economic data and a rather quiet trading session left the precious metal to post intraday lows before pulling back. However, the overall movement remains bullish as the precious metal remains hovering near the highs.
XAUUSD is Likely to Drift Sideways
Price action in XAUUSD suggests no major changes in the near term and could remain trading sideways in the short term. This comes ahead of the Fed meeting on Wednesday. The support level at 1320 remains a key price level of interest. Gold will have to break past the short term pivot lows of 1333.78 in order to confirm further downside to 1320.