US Dollar Retreats To Start The Week
GBP/USD: GDP to drive movement
The GBP/USD pair kicks off the new week on a subdued note and remains well within the striking distance of its lowest level since mid-May touched on Friday.
The British Pound continues to be undermined by the Bank of England's dovish pause last week, which lifted bets for an interest rate cut at the August monetary policy meeting. Adding to this, the flash UK PMIs released on Friday showed that private sector business activity expanded in June at its slowest rate since last November. This, along with some follow-through US Dollar (USD) buying, turns out to be another factor weighing on the GBP/USD pair.
The primary driver of movement for the Pound US Dollar exchange rate this week is likely to be the publication of both the UK’s and the US’s latest GDP data.
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EUR/USD: Trims losses near $1.0700
The EUR/USD pair trims losses near $1.0700 during the early European session this morning.?The upside of the major pair might be limited as investors are concerned about the political uncertainties in the Eurozone, particularly the outcome of a snap election in France. Furthermore, the stronger-than-expected US PMIs released on Friday?might lift the Greenback and create a headwind for the pair.
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Technically, the bearish outlook of EUR/USD remains intact as the major pair holds below the key 100-period Exponential Moving Average (EMA) on the 4-hour chart. The downward momentum is backed by the Relative Strength Index (RSI), which stands in the bearish zone near 40.0, indicating that further downside looks favourable.
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USD undermined by Fed cut bets
The US Dollar struggles to find demand at the beginning of the new week after outperforming its rivals on Friday.
Despite a number of recent hawkish commentary from Fed officials, the CME’s FedWatch Tool is now showing an almost 70% chance that the Federal Reserve will cut interest rates in September, with the tool also reporting the chance of an additional rate?cut in the last quarter of 2024, which undermined USD.
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