If the results exceed expectations, the US currency could stage a rally
The dollar came under pressure on Friday after a US government report showed the economy created 559,000 new nonfarm jobs in May, less than expected. The data helped ease worries about monetary policy tightening by the Federal Reserve and this pushed stocks higher ahead of the weekend.
Today, the selling pressure surrounding the greenback has eased as traders have already digested jobs data and started to gradually shift their focus to the US CPI report due on Tuesday. If the results exceed expectations, the US currency could receive a fresh bullish boost across the board amid growing inflation expectations that would in turn increase the odd of hiking interest rates by the Fed.
For the time being, EURUSD remains capped by the 20-DMA, suggesting the pair lacks recovery momentum at this stage, with short-term downside risks persisting. Of note, the common currency failed to derive support from fresh economic data out of the Eurozone. Investor confidence rose for the fourth month in a row in June, reaching its highest level since February 2018. Sentix’s index climbed to 28.1 from 21.0 in May versus 26.0 expected.
Meanwhile, the cable bounced from the 1.4110 area earlier in the day extend gains to the 1.4170 zone. However, the pair failed to preserve gains and retreated towards the flat-line in recent trading, looking directionless for the time being. On the positive side, GBPUSD managed to recover above the 1.4100 level and was last seen flirting with the 20-DMA.
As the dollar has steadied, gold prices turned marginally lower on the day while staying above the 20-DMA, today at $1,876. The precious metal could see deeper losses in the coming days if dollar bulls reenter the game amid strong inflation figures. Otherwise, the bullion may regain the $1,900 mark to notch fresh long-term highs eventually.
