Forex Today: Dollar oversold but still weak

FXStreet Team FXStreet

Here is what you need to know on Monday, August 31:

The dollar plunged on Friday in the aftermaths of the US Powell’s announcement last week. The Federal Reserve shifted the monetary policy, putting more emphasis on employment and saying it could let inflation run beyond the 2.0% target.

Japanese PM Shinzo Abe resigned over health issues. After eight years leading the country, Abe´s decision to step down spurred risk aversion by the end of the week. Still, he said that he would continue to lead the country until a new PM is approved.

The Pound could suffer a setback at the beginning of the week, amid news indicating that UK’s Finance Minister Sunak is considering a set of tax increases to compensate coronavirus pandemic extraordinary expenses. However, other cabinet members opposed to such a move, but instead want to consider spending cuts.

Wall Street closed with gains, despite risk-aversion dominated the first half of the day, following Abe’s resignation. US Treasury yields eased in the last trading day of the week but closed it with gains.

Gold closed with gains around $1,964 a troy ounce, after falling in the previous two weeks. Crude oil prices remained stable.

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FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

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Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

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