USD remains near two-week high ahead of Fed interest rates decision
The USD held near the two-week high after mixed retail sales data released on Friday. Data showed that the core retail sales rose by 0.5% in May as expected. The headline retail sales rose by 0.5%, which was higher than the previous month’s 0.3%. Ex gas and autos, retail sales of 0.5% topped the analysts’ forecast of 0.4%. The manufacturing production data from the Fed increased by 0.2% in May, higher than the expected 0.1% while the industrial production rose by 0.4%. This week, investors will watch out for the USD as the Fed delivers its interest rates decision. Later today, investors will receive the NY Empire State manufacturing index.
The sterling was relatively unmoved after the first debate among the candidates set to replace Theresa May took place. May announced her resignation two weeks ago but will remain as prime minister until her replacement is found. In the first debate, Boris Johnson, who is widely expected to win, failed to attend. The new prime minister will need to deliver Brexit by the October deadline.
The price of crude oil was relatively unmoved in overnight trading as the world deliberated on the next course of action regarding the tanker attacks. This was after two tankers were attacked at the Strait of Hormuz, where two-thirds of all seaborne crude oil passes. The US has placed the responsibility on Iran or one of its proxies while Iran has blamed the US or one of its allies including Saudi Arabia and Israel. To avoid a military confrontation, the EU asked the two sides to have restraint as an investigation is being conducted.
The EUR/USD pair rose slightly in the morning session. It is now trading at 1.1220, which is slightly higher than the Friday’s low of 1.1200. This is slightly lower than the 50% Fibonacci Retracement level. This price is along the 14-day moving average and slightly lower than the 28-day EMA. The RSI has emerged from the oversold level of 19 to the current 31. The pair will likely test the 50% Fibonacci level of 1.1230, and then resume the downward trend.
The price of Brent crude oil was relatively unmoved at $61.40. On the hourly chart, the price remains above the double bottom level of 59.05 and slightly above the 28-day and 14-day moving averages. The RSI has remained relatively unchanged at the current level of 60. Today, the pair will remain relatively unchanged as traders wait for inventory data expected tomorrow.
The GBP/USD pair moved slightly higher today and is currently trading at the 1.2595 level. On the hourly chart, this is much lower than last week’s high of 1.2758 and slightly below the 23.6% Fibonacci Retracement level. It is also along the 7-day EMA and slightly lower than the 14-day EMA, which appear to be crossing over. There is a likelihood that the pair will resume the downward trend to test the important support of 1.2558.