The US Core PCE Price Index data released last week showed that inflation remains within the Fed’s target range, while slightly elevated to 2.9% yearly. Anyway, even with this small growth, it still meets the Fed targets, which means that the Federal Reserve may consider cutting rates during the two-day meeting in September. 

The next important data will be released on Friday. Market participants are now focusing on the unemployment rate and Non-farm employment change data. According to forecasts, the unemployment rate in the United States is likely to increase to 4.3% from 4.2% in August, while the number of new jobs is likely to make soft gains of 2K in the same month. 

Today, market participants will also look closer at the US manufacturing PMI, which is expected to show some gains as well. However, even if the final reading meets expectations, the indicator will still remain below 50, which means contraction in the sector.

Anyway, taking into consideration all the given facts, the US dollar is likely to lose its position in the mid-term if nothing extraordinary happens.

EUR/USD: The Currency Pair Is Trying to Recover from Tuesday’s Losses

EUR/USD plunged on Tuesday on no evident fundamental factors and almost touched 1.1620, which is a crucial support area. The Eurozone’s inflation data was better than expected as the HCIP reached 2.1% yearly, and the Core CPI came in with the same reading as the previous one.

In general, the US dollar weakness should support the currency pair in the mid-term as the Fed is likely to cut rates in September. About 90% of market participants expect the central bank to resume easing this month with two more rate cuts this year.

From the technical analysis perspective, the currency pair is trading below the simple moving average of 50, meaning an instant shift in the market sentiment. However, the downside is limited due to fundamentals. In case of a reversal signal, traders can buy from current levels. Once the currency pair breaks above the SMA50, traders can buy from 1.1700.

GBP/USD: A Busy Week Ahead 

The British currency shows better performance this week, but failed to avoid a lightning-fast downside movement that was affected by DXY upside momentum. Currently, market participants are considering the facts that may influence the Bank of England’s decision. This week Monetary Policy Report Hearings will take place and we will learn more about the plans of the UK central bank. Moreover, retail sales data on Friday may also provide market participants with some cues about the future central bank decisions.

According to the latest comments from Catherine Mann, a voting member of the Bank of England, central bankers are now sticking to the wait-and-see approach, which means that they are not planning to make any dovish steps in the near term. However, the opinion of the majority of voting members may change depending on the upcoming data.

From a technical analysis perspective, the British pound is trading below the SMA50, which means that market sentiment shifted. Any reversal signal from current levels will be appropriate for buyers, while sellers can engage if the currency pair breaks below 1.3360. Also, if the currency pair moves above the SMA50, you can buy from there.

Gold: The Precious Metal Is Supported By the Expectations of the Fed Rate Cuts and US Tensions

Gold is outperforming most assets due to the Fed rate cut expectations. About 90% of traders and investors now believe that the Federal Reserve will take a dovish step during the upcoming meeting. Moreover, market participants expect that the central bank will conduct at least two more rate cuts this year.

Gold is also supported by the tensions in the United States between the Federal Reserve and the White House. Donald Trump has fired Lisa Cook, a voting member, but she refused to go as she believes the president has no authority to dismiss her. In general, current White House administration threatens the Fed’s independence, which may further undermine the US dollar.

From a technical analysis perspective, gold remains bullish as the asset is trading above the SMA50. Buyers can engage from 3,500 or higher, targeting 3,540-3,550. On the downside, sellers can place orders below 3,460, targeting 3,400.

WTI: Crude Oil Is Supported by the Upcoming OPEC+ Meeting

Crude oil is trending upwards as market participants expect the OPEC+ to leave the current output levels intact. Moreover, according to some rumors, the cartel is likely to review oil output for the upcoming year, which may provide further support to the commodity. 

From the technical analysis perspective, WTI is trading far above the SMA50 and a correction towards the moving average is possible. Therefore, long positions will be preferable from 64.90 and 64.40 if reversal signals occur there.