The US dollar attempted to reverse the losses from last week on Monday, turning slightly bullish. However, price action was rather subdued. Investors will be looking towards the US retail sales report due later today.
Following a strong gain in May, economists forecast that retail sales will rise at a slower pace in June. Meanwhile, Fed Chair Jerome Powell is scheduled to speak in Paris later this evening.
Officials Warn of Possible Slowdown in German Growth
Germany’s services sector could see a slowdown in the coming months, alongside sluggish growth in the industrial sector. Germany’s economic minister cautioned that the services sector was what was driving Germany’s growth so far. Officials are expecting to see growth in Europe’s largest economy slowing. This potentially drags the eurozone’s growth lower as well.
EURUSD Steady Above 1.1250
The common currency held on to the support at 1.1250 level on Monday. Price action was subdued due to lack of any clear fundamentals. However, investors are expecting the ECB to act, either by cutting rates even lower or restarting the QE program. As long as the 1.1250 level holds, the currency pair could be aiming for 1.1400.
Oil Slips as China GDP Dampens Outlook
WTI Crude oil prices closed 1.6% lower on Monday. China’s second-quarter GDP showed a growth rate of just 6.2%. This was much slower compared to the first-quarter GDP growth. In the first half of the year, China’s GDP grew just 6.3%, marking one of the slowest paces of increase in expansion. The data underlined the view that global growth is slowing.
Will Oil Extend Declines?
Crude oil closed bearish on Monday. This comes after two consecutive sessions of declines in the commodity. However, we anticipate price to remain rather flat. Crude oil briefly tested the resistance area of 61.00 before easing lower. Alternatively, unless we see a close above 61.00, oil prices could continue to push lower. The downside target is seen at the 57.50 support area.
Gold Continues to Stay Flat
The precious metal remained stuck in a range near the highs above 1400 for four consecutive weeks.Equity markets meanwhile pushed higher as the US corporate earnings get underway. Markets remain muted as investors wait for the Fed meeting due to take place in late July. The prospects for a Fed rate cut look to be priced into the precious metal currently.
Will XAUUSD Maintain the Sideways Range?
Price action has moved into the upper end of the range, trading within 1423 and 1404 levels. A breakout above 1423 is required on a daily basis in order to confirm the upside. However, considering the flat price action near the highs, we expect to see a correction lower in the near term. The breakdown below 1404 will trigger a move to 1383.50.