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

June 15, 2022

EUR/USD: The euro held near recent lows against the dollar as worries over aggressive U.S. interest rate hikes weighed in single currency. Investors remained on edge, ahead of the outcome of a Federal Reserve policy meeting due late on Wednesday. Friday’s U.S. inflation data fuelled bets that the Fed would become more aggressive than indicated by its forward guidance. Focus is on the Fed’s policy decision due on Wednesday, with many expecting a big three-quarter-percentage point rate hike following hot inflation print last week. On the data front, German investor sentiment rose slightly in June, roughly in line with market expectations, as financial market experts were less pessimistic about the economy, though it remained in negative territory due to numerous risks. Moving on, Eurozone Industrial Production for April and the US Retail Sales for May could entertain EUR/USD traders, along with the risk catalysts. Additionally, ECB President Christine Lagarde is also up for a speech and may help the EUR/USD prices gain upside traction.

SELL LIMIT 1.0464/TP 1.0410/SL 1.0493


USD/CAD: The Canadian dollar extended its recent decline against its U.S. counterpart on lingering jitters that the Federal Reserve, which began a two-day policy meeting, would be unable to control inflation without triggering a recession. The loonie weakened even as money markets fully priced in a three-quarter percentage point rate increase by the Bank of Canada at its next policy announcement on July 13, which would be the biggest hike since August 1998, and bet that rates would peak near 4% next year. Price pressures have reached the rooftop and are denting the paychecks of the households. Therefore, the market participants are expecting a rate hike by 75 basis points this time.

BUY STOP 1.2970/TP 1.3021/SL 1.2945


XAU/USD: Gold gave up small gains in range-bound trading as the dollar resumed its climb and hit a 20-year high, eroding bullion’s safe-haven appeal on investor bets of aggressive rate hikes by the U.S. Federal Reserve. The odds of a 75 basis point rate hike by the Fed have improved significantly and investors have understood the fact that an extreme rate hike is highly required to tame the soaring inflation. Therefore, investors are ignoring the rate hike-associated uncertainty and shifting their funds from the US dollar index (DXY) to gold prices and other risk-sensitive currencies. As per the CME Fedwatch tool, the chances of announcing a rate hike of 75 basis points (bps) are 99%.

SELL LIMIT 1817.40/TP 1807.00/SL 1823.60