The US dollar dropped to the lowest level in two years as fears of uneven recovery of the US economy remained. The greenback dropped against all currencies in the developed world and most currencies in the emerging market. Attention now shifts to the Federal Reserve, which will start its monthly meeting today and deliver its decision tomorrow. Analysts believe that the bank will leave interest rates and the quantitative easing program unchanged. They also expect Jerome Powell to talk about more easing measures to support the embattled economy.
US futures rose as investors continued to focus on stimulus from Washington. In a statement yesterday, Republicans in the Senate unveiled a $1 trillion package that they hope will support the economy. Their package will cut the weekly unemployment benefits from $600 to $200 per week. The goal is to incentivise people to go back to work. Democrats want to extend the $600 benefits to January next year. Also, their package includes $1,200 payouts to individuals and liability protection for companies that are following guidelines. It also includes $16 billion for testing and $25 billion for hospitals.
Gold price continued to rally in overnight trading as the talk of stimulus continued. It is now trading just $30 below the important $2,000 milestone. Other metals, too, have risen sharply, including silver, copper, and palladium, that are trading at multi-year highs. Today, with no major economic release in the calendar, the metals will likely continue to rise. Meanwhile, investors will refocus on corporate earnings, with companies like Michelin, Live Nation, Dolby Labs, and Johnson Matthey expected to release their quarterly earnings.
EUR/USD
The EUR/USD pair is trading at 1.1757, which is a few pips below yesterday’s high of 1.1780. On the daily chart, the price is above the 50-day and 100-day exponential moving averages while the RSI has moved to the highest level in years. The same is true with the signal and main line of the MACD indicator. Therefore, while the pair is likely to continue moving higher, a pullback is also possible as bulls take profit.
GBP/USD
The GBP/USD pair rose to an intraday high of 1.2885, which is the highest it has been in months. On the four-hour chart, the price is above the 50-day and 100-day exponential moving averages. The RSI has moved to the overbought level of 70 while the accumulation and distribution line has continued to rise. The upward trend is likely to continue as bulls aim for the 1.2900 resistance level.
XAU/USD
The XAU/USD pair rose to an intraday high of 1978, which is a new record price. On the daily chart, the price is above all the short, medium, and long-term moving averages. Also, the RSI has moved to the overbought level of 70 while the two lines of the Relative Vigour Index are at the highest level in months. Therefore, it seems that there is momentum on gold’s side, which means that the price is likely to continue rising. Still, it is possible that a pullback will happen as the Fed starts its meeting.
