USD closes bearish ahead of an important week
The US dollar closed bearish, marking two consecutive days of declines. This comes as investors likely booked profits ahead of the Wednesday FOMC meeting. The Federal Reserve is expected to lower interest rates by a quarter basis point. Meanwhile, on the economic front, retail sales rose 0.4% on the month in August. This beat estimates of a 0.2% increase.
Euro Maintains Gains as Trade Surplus Rises
The euro currency managed to hold on to the gains from the ECB meeting on Thursday. The common currency posted modest gains on Friday. The trade surplus report for July showed an increase. On a seasonally adjusted basis, eurozone’s trade surplus rose to 19 billion from 17.7 billion in June. Exports gained 6.2% while imports rose 2.3% on the year ending July.
EURUSD Could Retest Support
The upside momentum looks to be fading at the moment. As a result, this could push the common currency lower to test the support at 1.1030. Establishing support at this level will open the upside bias. The resistance level at 1.1140 will be the likely target in the near term. However, a breakdown below the support could keep EURUSD back to the sideways range.
GBP Rallies on DUP Reports
Sterling surged strongly on Friday after reports that the Democratic Union Party (DUP) is softening its stance on the Irish backstop. The Irish backstop has been the main sticking point in the Brexit negotiations so far. However, GBP maintained gains despite the party dismissing the reports as rumors. Boris Johnson is due to meet his EU counterparts later today.
GBPUSD Gains to Stall Near Resistance
The currency pair, after consolidating near the support area of 1.2328 has managed to resume the rally. The gains have pushed GBPUSD close to the resistance area of 1.2511–1.2533. A test of this level will potentially put a lid on the gains for the moment. GBPUSD could, therefore, settle back within the range of the said resistance level and the lower support at 1.2328.
Gold Prices Decline for Three Consecutive Weeks
The precious metal closed on Friday in the red marking three consecutive weekly declines. The bearish pullback to the strong rally comes ahead of the key monetary policy decision from the Federal Reserve and many other central banks. Easing trade tensions between the US and China also contributed to the risk-on sentiment.
Will XAUUSD Break the Support?
Price action in XAUUSD has been concentrated within the range of 1508 and 1485. Failure to breakout higher has kept price subdued. Therefore, there is a good chance that gold could continue its descent. The lower support at 1431–1428 therefore, cannot be ruled out. A retest of this level to establish support will mark the completion of the longer-term correction in the precious metal.