The US dollar begins the new trading week under pressure following an exceptionally weak US employment report last Friday. Gold continues to retain firm upward momentum following one of its strongest advances in recent months. EURUSD benefited from broad USD weakness, breaking decisively above the 1.15800 level before entering a period of consolidation near 1.15560. Bitcoin continues to trade comfortably above $65,000, although it remains confined within the trading range that has dominated price action for almost two months.
- Markets have now largely ruled out the possibility of the Fed’s rate hike in September and are pricing in a more accommodative monetary policy stance.
- After the disappointing US NFP report on Friday, XAUUSD rallied by around 2.5% during the session, finishing last week with gains of almost 5.9%, its strongest weekly performance since January.
- Such price action in EURUSD appears entirely consistent after last week’s sharp advance
- The $65,300 area remains the key technical level to monitor for Bitcoin.
FX snapshot
XAUUSD
The price tested the $4,380 area on Friday and is now trading close to those highs, indicating that buying interest remains firmly intact.
EURUSD
The pair’s next significant move will depend less on developments within the eurozone and more on expectations for the Fed’s policy.
BTC
A decisive break above the mentioned resistance could open the way towards $67,000 and attract renewed buying interest. Failure to sustain gains above $65,300, however, could result in another test of support around $62,700.
Market sentiment
Investors are gradually shifting their focus from the prospect of further policy tightening towards the timing and pace of future monetary easing, supporting both risk assets and gold. Nevertheless, tomorrow’s US inflation report is expected to provide a crucial test to the current market narrative. A softer CPI reading would reinforce expectations of policy easing and could extend the prevailing trends across gold, the euro and crypto.
Conversely, stronger inflation could prompt a significant reassessment of current positioning and trigger a renewed increase in market volatility. Either way, the data are likely to determine whether the present rally develops into a sustained long-term trend or proves to be another period of market volatility.
