The U.S. Dollar extended declines on Monday. Economic data on the day was sparse. The Eurogroup meetings kicked off with focus turning to the Brexit deal. The EU’s negotiator for Brexit, Michel Barnier said that the EU ministers were in support of the draft accord. However, uncertainty remains with PM May and her cabinet.
The pound sterling was seen trading subdued due to this uncertainty.
The NY trading session was also relatively quiet with no significant events being released. The FOMC member, Williams was speaking yesterday. His comments were broadly positive of the U.S. economy and supported the Fed’s view for rate hikes. A contrary comment compared to the views from the Fed vice chairman, Clarida on Friday.
Earlier today the RBA released the monetary policy meeting minutes. The market reaction was muted. The RBA Governor, Lowe is scheduled to speak later this morning.
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The European trading session is relatively quiet with no major releases in store. The NY trading session will see the release of the building permits and housing starts data. Building permits are forecast to rise by 1.26 million while housing starts are expected to increase by 1.23 million.
The recent slowdown in the housing market, however, exposes the risk of a weaker than expected print.
EURUSD intraday analysis
EURUSD (1.1447): The EURUSD currency pair continued to extend gains on Monday. However, price action is seen trading within the resistance level of 1.1435 – 1.1463. Failure to break out from this resistance level could potentially push the common currency lower. We expect the declines to stall near the 20-period EMA on the 4-hour time frame which could act as dynamic support. Overall, the EURUSD currency pair is likely to trade flat below the resistance level.
GBPUSD intraday analysis
GBPUSD (1.2855): The GBPUSD is seen settling into a range as price manages to bounce off the support area of 1.2808. However, we expect the bias to remain to remain to the downside. The lower support at 1.2683 remains untested which could form the downside target if the sentiment further deteriorates. To the upside, the resistance area of 1.3086 remains as the upper range.
XAUUSD intraday analysis
XAUUSD (1222.26): Gold was trading flat on Monday as price action closed with a near doji pattern. This potentially indicates exhaustion to the rally seen last week. The 4-hour Stochastics oscillator is also pointing to a correction. This comes as price struggles near the resistance area of 1224 – 1223 region. A correction to the downside could push gold prices lower toward the initial support level of 1213.50. A break down below this level could further push gold toward the previously established resistance level of 1204.10 which could be tested for support.