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EUR/USD Rebounds as US Dollar Weakens on Disappointing Economic Data
The EUR/USD saw a rebound during the American session, driven by the broad-based weakness of the US dollar following the release of underwhelming US economic data. Federal Reserve rate expectations remain influential ahead of the upcoming June 13-14 meeting.
In contrast, the Euro experienced mixed performance due to lacklustre economic reports and European Central Bank President Christine Lagarde’s testimony. Lagarde hinted at potential rate hikes in the Euro area, while Eurozone data fell below expectations. Meanwhile, the US ISM Services PMI report further dampened the US dollar as it fell short of projections. Consequently, US Treasury bonds gained strength, impacting Wall Street and causing US yields to drop.
According to technical analysis, the EUR/USD pair is moving higher on Monday, reaching the middle band of the Bollinger Bands. Currently, the EUR/USD is trading just above the middle band, with the potential for it to move higher and reach the upper band of the Bollinger Bands. The Relative Strength Index (RSI) is currently at 49, indicating that the EUR/USD is in a neutral trend with a slightly bullish bias.
Resistance: 1.0766, 1.0824
Support: 1.0706, 1.0671
Gold (XAU/USD) Recovers as US Dollar Falters on Weak Data, Uncertainty Surrounds Fed’s Monetary Policy Decision
In the first half of the day, the US Dollar showed strength but later reversed course due to lackluster American data. Amidst this, Gold (XAU/USD) rebounded from its intraday low and hovered near a recent high. The decline in the ISM Services PMI and modest Factory Orders growth put pressure on the USD, causing Treasury yields to fall. Market participants are grappling with uncertainty regarding the upcoming US Federal Reserve monetary policy decision, as inflation remains slow while the job market remains tight. As the decision approaches next week, financial markets await further communication from American policymakers.
The US Dollar started strong but reversed course due to weak US data, causing the XAU/USD to recover from a low and trade near a recent high. The decline in the ISM Services PMI and modest Factory Orders growth pressured the USD. US Treasury yields fell after initially rising post a solid Nonfarm Payrolls report. Uncertainty surrounds the upcoming US Federal Reserve decision, as inflation slows while the job market remains tight. Market participants anticipate the Fed to hold off on rate hikes in their June meeting but keep future hikes as a possibility. The Fed’s decision will be announced next week, keeping financial markets waiting for updates from American policymakers.
According to technical analysis, the XAU/USD pair is moving higher on Monday, reaching the middle band of the Bollinger Bands. There is a possibility that the XAU/USD will continue to move higher and try to reach the upper band of the Bollinger Bands. Currently, the Relative Strength Index (RSI) is at 51, suggesting that the XAU/USD is in a neutral but slightly bullish trend.
Resistance: $1,970, $1,984
Support: $1,951, $1,937