The US dollar was seen posting strong gains amid a rather quiet day.
The US markets were closed in observance of Labor Day holiday. However, investors were cautious as the US tariffs came into effect on Monday. China was seen taking a softer approach, leaving most of its retaliatory tariff hikes to December.
Eurozone Manufacturing Contracts for 7th Consecutive Month
The monthly manufacturing PMI report from the eurozone showed a continued dismal performance. IHS Markit’s monthly manufacturing PMI showed that activity contracted for the seventh consecutive month. The PMI rose to 47.0 from 46.5 in July, marking the second-lowest reading since April 2013.
EURUSD Maintains the Bearish Momentum
The currency pair continued to extend declines. Price action fell to fresh lows of 1.0968. The bearish momentum is likely to persist for a while. With the economic data picking up over the week, there is scope for the currency pair to post a rebound in the near term. The recently breached support area of 1.1066 is likely to be tested for resistance in the near term.
Sterling Slips to Fresh Lows on Rumors of Snap Elections
The pound sterling extended losses sharply on Monday. The declines came on rumors that PM Johnson would be planning for a snap election ahead of the Brexit deadline. Earlier in the day, IHS Markit’s manufacturing PMI fell at the fastest pace since 2012. The manufacturing PMI fell to 47.4 in August from 48.0 the month before.
GBPUSD Invalidates the Descending Wedge Pattern
The currency pair invalidated the descending wedge pattern after falling below the key levels of 1.2170 and 1.2082. The declines will likely see the currency pair consolidating near the lows. Further gains will depend on the fundamental news flows. In the near term, the currency pair will see prices staying within 1.2082 – 1.2026.
Gold Muted as Follar Maintains Gains
The precious metal traded subdued on Monday. A lack of any major news kept gold prices in check. However, with the US markets reopening today, we could expect to see some volatility. Fed Chair Powell is slated to speak later in the week and the US economic data also picks up steam.
XAUUSD Poised to the Upside in the Near Term
XAUUSD is consolidating into a wedge pattern near the highs. With the support area of 1525.86 being tested, gold prices could push higher. However, the next main resistance area comes in at the previously established highs of 1554.50. A breakout above this level will see further gains being logged. Alternately, if the support area of 1525.86 gives way, gold prices could be looking at a correction.