Markets are in a state of consolidation as the most important economic events are still ahead of us: Federal Open Market Committee on Wednesday and US Advanced GDP (Gross Domestic Product) on Friday.
Both of them are USD related and I would say that nothing else matters this week despite the fact that on Friday Eurozone CPI (Consumer Price Index) is going to be announced.
Most likely the Federal Reserve will keep the interest rate unchanged and will address a cautious tone when it comes to future monetary policy decisions. However, we should not rule out surprises when it comes to interest rate decisions.
EURUSD is trading in a range between 1.0950 area and 1.1050 and probably this range will going to hold all the way into the Fed tomorrow. My bias here is that it will try to go for 1.11 and higher on a no change in policy in the United States, but any upside should be limited.
The same can be said about the AUDUSD pair as it is looking like a corrective wave to the upside is not completed and market preparing for a move above 0.760 again. It is dangerous to stay short at current 0.7530 levels ahead of the Australian CPI, so looking to either buy from lower levels or sell from above 0.7650.
What’s interesting is that at the same time the USDCAD air is bullish as well, with prices over 1.32 as oil is retracing 38.2% of its recent rally. On the daily chart a triangle is visible on the pair and it is not clear now if it is broken yet or not.
My take is that if the AUDUSD and EURUSD are going to make a new move higher, then the triangle on the USDCAD is not completed and probably the last leg of it will end this week.
Still on Friday the GDP in the United States will tell us the size of the US economy and the growth rate and the US dollar should travel as well. My bias is for upside revisions of the previous releases as well, so looking to buy the US dollar in general ahead the release.