The dollar held steady on July 24, trading in a narrow range ahead of Thursday's ECB and next week's Fed monetary policy meeting. The euro fell to a low of nearly two months and the pound shook nearly 100 points, the biggest gain in nearly a week. Gold prices rose, ending three consecutive days of decline.
XAUUSD
Gold stopped falling at $1416 an ounce on Wednesday and rebounded $8.1, trading at $1421.09 an ounce at the time of release.
Manufacturing activity stagnated in July, with Markit manufacturing PMI falling to 50 in July from 50.6 in June, the lowest level since September 2009, according to the latest U.S. economic data. Euro zone manufacturing PMI across the board, particularly in Germany, has raised concerns among all-ball investors about the prospect of economic stall, a situation that will further force the ECB to release more loose language and even act directly tomorrow. Gold investors are also pinning their hopes on the ECB's dovish signal. At the same time, the situation in the Middle East has brought risk aversion to the market, the US military said on Tuesday that a U.S. Navy ship took defensive action against a second Iranian drone in the Strait of Hormuz last week, but did not see the drone fall into the sea. Geopolitical instability has also underpinned gold prices, which are expected to rise even further.
Technically, the daily chart shows that the consolidated flag shape formed by gold at the end of June was broken through last week, rising to 1452.81 US dollars per ounce at one point, falling back to the interior of the flag in the process of stepping back, and being supported in the 20-day average of the Brin belt. Now it has broken through the flag again, and gold is expected to have more room to rise in the future. The initial target is $1440 an ounce where Brin is orbiting.
EURUSD
The euro fell for the third straight day of trading on Wednesday, falling as low as 1.1126, while the daily line fell 8 points to close at 1.1141.
The Eurozone Purchasing Managers' Index (PMI) fell to 51.5 this month from 52.2 in June, lower than the expected value of 52.1, with Germany's manufacturing PMI hitting a new low in seven years. The market has increased its bets on the European Central Bank to cut interest rates, and the money market expects the European Central Bank to cut interest rates by 10 basis points at a meeting on Thursday at 54%. In general, the dovish information will be passed, but no further signals will be transmitted at present, and a significant shift to the doves may still push the euro to a new trading range below $1.11. It is widely expected that the European Central Bank will cut interest rates in September, but the Eurozone PMI data released on Wednesday is bleak, raising the possibility of the ECB cutting interest rates in the upcoming interest rate decision. The euro's overnight interest rate average showed that the European Central Bank's probability of a 10 basis point cut in interest rates once rose to 51%. On Thursday, investors are invited to focus on the interest rate resolutions to be announced by the ECB at 9:45 pm tonight, and the subsequent press conference of President Draghi.
On the technical side, the daily chart shows that the euro has been out of the head and shoulders since June of this year, and has now fallen below the 1.1190 line of the neckline, opening up further downside. And the euro broke the Bollinger down the track, the Bollinger band opened up, there is a tendency to form a unilateral decline. The euro is expected to continue to look down towards the 2019 low of 1.1106.
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