Forex Today: Dollar weaker as Fed looms

Valeria Bednarik FXStreet

What you need to know on Wednesday, July 28:

The dollar fell, despite a generalized dismal mood. Global stocks edged lower, while demand for government bonds increased, pushing yields lower. Market players were cautious ahead of the US Federal Reserve decision on monetary policy. The central bank will likely maintain its monetary policy on hold, with the focus on when and how they will start retrieving monetary support.

Wall Street followed the lead of its overseas counterparts and closed in the red, although off its daily lows, indexes advanced further in futures trading amid strong earnings reports. US government bond yields edged lower, reflecting the dominant cautious mood.

US data was mixed. Durable Goods Orders were up 0.8% MoM in June, much worse than the 2.1% expected. The core reading, Nondefense Capital Goods Orders ex Aircraft, surged 0.5%, also missing expectations. On a positive note, CB Consumer Confidence improved to 129.1 from an upwardly revised 128.9 in June.

The EUR/USD pair reached a weekly high of 1.1840, retreating afterwards to close the day at 1.1820. GBP/USD hovers near 1.3900 retaining intraday gains. Commodity-linked currencies were the worst performers, ending the day pretty much unchanged vs the greenback. Safe haven yen and CHF were sharply up.

Gold struggles around $1,800, while crude oil prices eased. WTI settled around $71.70 a barrel.

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD faces next resistance near 1.1930

EUR/USD continues to build on its recovery in the latter part of Wednesday’s session, with upside momentum accelerating as the pair retargets the key 1.1900 barrier amid a further loss of traction in the US Dollar. Attention now shifts squarely to the US data docket, with labour market figures and the always influential CPI releases due on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.