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Gold prices were seen trading within the range in a holding pattern ahead of the start of the two-day FOMC meeting today. The outlook for Fed officials remains a lot more clouded amid latest inflation figures showing practically no price pressures. Meanwhile, the economy continues to rise at a steady pace with the labor market remaining the cornerstone of growth.

Will XAUUSD Continue to Consolidate?

Gold prices extended declines, but the daily price action was steady within Friday’s range. This could potentially see prices holding steady ahead of the Fed meeting due on Wednesday. XAUUSD continues to remain buoyed to the upside by the 200-day moving average. As XAUUSD forms the resistance at 1285, price action remains flat for the moment. But a breakout is likely in either direction.

Crude oil prices recovered from Friday’s losses, but the downside pressure persists. On Monday, President Trump tweeted that he demanded OPEC to raise supply. He said that Saudi Arabia and other OPEC nations were in agreement. US Secretary of State Mike Pompeo said that the US is taking all measures to ensure supply is not disrupted after Iran’s oil waivers end tomorrow.

WTI Holds on to the Support

Crude oil prices bounced off the support level formed at 62.85 level. However, price action remains weak to the upside. The API crude oil inventory report, due out later today could provide some catalyst to the price action. The resistance level at 64.55 is the likely target to the upside. To the downside, a break down below the support of 62.85 will see crude oil extending declines lower.

The common currency recovered from last week's losses. The euro gained 0.37% on Monday. The gains came mostly on a weaker greenback. The US core PCE price index came out flat on the month. Personal spending and income outlays also rose less than forecast, increasing by 0.1% on both counts.

Can the EURUSD Extend the Gains?

The common currency managed to bounce higher after price cleared 1.1140 to establish support. Price briefly dipped to this level on Monday before continuing to push higher on the day. With the recently breached support level at 1.1226, we expect the common currency to establish resistance at this level in the near term.

Asian stocks declined as traders start to worry about China’s growth. This is after the country released weak PMI data for April. During the month, the Markit manufacturing PMI declined to 50.1 from the previous 50.5. Traders were expecting the PMI to rise to 50.7. Data released by Caixin showed that the manufacturing PMI declined to 50.2 from the previous 50.8. The non-manufacturing PMI declined to 54.3 from the previous 55. This data comes after impressive Q1 GDP growth in the country.

The euro rose slightly ahead of the release of key economic data from Europe. In Germany, the unemployment rate is expected to remain unchanged at 4.9. In Italy, the unemployment rate is expected to drop slightly to 10.6% from the previous 10.7%. In Europe, the GDP for the first quarter is expected to remain at 1.1%. On a QoQ basis, the GDP is expected to rise by 0.3%. In Germany, the headline CPI is expected to rise by 1.6% from the previous 1.3%. Harmonized inflation is expected to rise by 1.7%.

The Canadian dollar was little moved ahead of key economic growth numbers. The numbers are expected to show that the country’s economy grew by 1.4% in the first quarter. This will be slightly lower than the previous growth of 1.6%. On a quarterly basis, the economy is likely to grow by 0.1%, lower than the previous 0.3%. The Industrial product price index should have grown by an annualized rate of 0.7% while raw materials prices are expected to have grown by 3.9%.

EUR/USD

Since Friday, the EUR/USD pair has risen from a low of 1.1109 to a high of 1.1192. On the hourly chart, this price is along the 38.2% Fibonacci Retracement line. It is slightly above the 25-day and 50-day moving averages while the volumes indicator remained significantly low. The momentum indicator has continued to rise. There is a likelihood that the pair will continue moving higher, potentially to the 50% Fibonacci Retracement level of 1.1215.

USD/CAD

The USD/CAD pair was little changed ahead of the Canadian economic data. The pair is trading at 1.3460, which is slightly lower than the previous high of 1.3520. On the four-hour chart, the price is along the 25-day moving averages and above the 50-day moving averages. The price is also between the 100% and 61.8% Fibonacci Retracement line. There is a likelihood that the pair will resume the upward trend, to test the previous high of 1.3520.

GBP/USD

The GBP/USD pair paused the downward trend that started in mid-March. It is now trading at 1.2938, which is slightly above the previous low of 1.2860. On the chart below, this is along the upper line of the Bollinger Bands while the RSI has continued moving higher. The pair will likely continue moving higher to test the 50% Fibonacci Retracement level of 1.3075.

The euro is trading towards the best levels of the week against the US dollar after the pair moved above the major technical resistance, at 1.1174. If the EURUSD pair continues to trade above the 1.1174 level, the next key resistance area to watch is the 1.1216 level. EURUSD traders are now awaiting the release of French and eurozone GDP data this morning, with expectations tilted to the upside.

The EURUSD pair is only bearish while trading below the 1.1174 level, key technical support is found at the 1.1150 and 1.1135 levels.

If the EURUSD pair holds above 1.1174 level, key intraday resistance is found at the 1.1216 and 1.1250 levels.

The US dollar is back under pressure against the Japanese yen currency on Tuesday after the pair found strong resistance from the 111.88 level. The sentiment towards the USDJPY pair is intraday bearish while price trades below the 111.60 technical level. If sellers can move price under the 111.40 level they will trigger a head and shoulders pattern with a downside projection of fifty points.

The USDJPY pair is bearish while trading below the 111.60, key intraday support is found at the 111.40 and 110.90 levels.

If the USDJPY pair trades above the 111.60 level, key intraday resistance remains at the 111.88 and 112.00 levels.

Ethereum is under downside pressure on Tuesday, with the second largest cryptocurrency by market capitalization trading towards the $150.00 level. The ETHUSD pair has a bearish intraday bias while trading below the $158.00 and could weaken below the important $145.00 level. The daily time frame is currently showing that critical weekly support for the ETHUSD pair is located at the $130.00 level.

The ETHUSD pair is bearish while trading below the $158.00 level, key support is found at the $145.00 and $130.00 levels.

If the ETHUSD pair trades above the $158.00 level, key resistance is found at the $170.00 and $185.00 levels.

Pivot (invalidation): 62.85

Our preference Long positions above 62.85 with targets at 63.85 & 64.35 in extension.

Alternative scenario Below 62.85 look for further downside with 62.30 & 61.95 as targets.

Comment The RSI is mixed to bullish.

Pivot (invalidation): 15.0000

Our preference Short positions below 15.0000 with targets at 14.8400 & 14.7700 in extension.

Alternative scenario Above 15.0000 look for further upside with 15.0800 & 15.1400 as targets.

Comment As Long as 15.0000 is resistance, expect a return to 14.8400.

Pivot (invalidation): 1283.25

Our preference Short positions below 1283.25 with targets at 1278.00 & 1276.50 in extension.

Alternative scenario Above 1283.25 look for further upside with 1286.50 & 1288.50 as targets.

Comment The RSI is mixed and calls for caution