The US Dollar is struggling to maintain support amid significant upcoming economic events, including the Bank of Canada rate decision, the ECB meeting, and the crucial Non-Farm Payrolls report. These events, along with the FOMC meeting next week, could shape market trends for the US Dollar and gold, with traders closely monitoring for signs of potential rate cuts and shifts in market sentiment.
The US Dollar is currently grasping onto support levels derived from the swing lows of April and May. The next week-and-a-half is laden with significant headline risks that could sway market sentiment. Key events include the Bank of Canada rate decision on Wednesday, the European Central Bank (ECB) meeting on Thursday, and the Non-Farm Payrolls (NFP) report on Friday. The following week brings the Federal Open Market Committee (FOMC) rate decision on Wednesday.
Upcoming Key Events
Bank of Canada Rate Decision (Wednesday): This decision could provide early clues about North American monetary policy trends.
ECB Meeting (Thursday): Markets will be closely watching for any changes in the European monetary policy stance, which could impact the Euro and, by extension, the US Dollar.
Non-Farm Payrolls (Friday): The NFP report is particularly crucial as last month’s headline miss was the first since November, giving USD bears a boost. Another poor NFP print could further weaken the US Dollar.
FOMC Rate Decision (Next Wednesday): While no rate changes are expected, the possibility of a July rate cut may be discussed, especially if the NFP report is weak. This discussion could provide USD bears with additional motivation to push for lower lows and lower highs, continuing the trend seen since the May 1st rate decision.
Gold Market Analysis
The monthly chart of gold is showing signs of bull exhaustion, indicated by two long, extended upper wicks over the past two months. This could suggest a possible pullback scenario, though the timing remains uncertain.
Support Levels:
- 2319-2326 Zone: Current support is being tested within this range, which held resistance in early May.
- 2300 Level: Another key support level that might come into play if the current support fails.
Resistance Levels:
- 2350-2354 Zone: This range held the highs yesterday and late last week.
- 2372-2378 Zone: Potential resistance, previously acting as support, could come into focus if bulls manage to break above current levels.
Market Sentiment
Bulls appear to be losing steam at resistance levels or fresh highs, but they remain active around support zones. The repeated upper wicks in the monthly chart of gold suggest that while bulls are struggling at higher levels, they haven't completely lost control.
Conclusion
The upcoming economic events, particularly the NFP report and the FOMC meeting, are likely to be pivotal for the US Dollar and gold. Traders should watch these developments closely, as they could set the stage for significant market movements.