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Trading ideas for EUR/USD, GBP/USD, XAU/USD

June 14, 2022

EUR/USD: The euro declined as the US dollar resumed its growth. US inflation fueled worries about even more aggressive policy tightening in a big week for central banks. The inflation reading unnerved investors as markets ratcheted up expectations on where US interest rates would peak next year to around 4% from around 3% less than two weeks ago. Expectations of even more aggressive rate hikes from global central banks prompted investors to ramp up their bullish bets on the dollar. This is a big week for central banks with the Fed, the Bank of England and Swiss National Bank holding policy meetings. ECB President Christine Lagarde decided to take the bullet despite soaring inflationary pressures. However, the guidance was hawkish and a rate hike by 25 basis points in July is on the cards. This week, the speech from ECB Lagarde will remain in focus. The speech is expected to dictate the potential monetary policy action in July.

SELL 1.0420/TP 1.0390/SL 1.0435

 

GBP/USD: Sterling edged lower against the dollar after data showed the British economy unexpectedly shrank in April and amid tensions with the European Union over post-Brexit trade with Northern Ireland. Gross domestic product contracted by 0.3% after falling by 0.1% in March, the first back-to-back declines since March and April 2020, at the start of the coronavirus pandemic. British economic growth is already expected to be among the weakest for wealthy countries in 2023, and there is uncertainty over how fast the Bank of England can raise interest rates to tame inflation without further hurting the economy. Doubts over the Bank of England’s (BOE) capacity to avoid recession and aptly tame the inflation woes also exert downside pressure on the GBP/USD prices.

SELL STOP 1.2165/TP 1.2090/SL 1.2200

 

XAU/USD: Gold Price is seeing a dead cat bounce above $1,800, having hit the lowest level in one month earlier this Tuesday. Increasing bets of a 75 basis points Fed rate hike this week keep the sentiment around the US dollar, as well as, the Treasury yields buoyed. The safe-haven dollar also drew support from global stocks amid growing fears of higher rates leading to a US recession, which tripped Wall Street into a bear market. The non-yielding XAUUSD is unlikely to attract solid bids heading into Wednesday’s Fed showdown. The Federal Reserve this week is expected to hike which is pushing bond yields to the highest in more than a decade as the central bank is expected to raise interest rates by at least 50-basis points after inflation rose to a 40 year high in May.

SELL LIMIT 1829.50/TP 1817.50/SL 1835.00