EUR/USD

The EUR/USD pair shows mixed trading dynamics, consolidating near 1.2220. The day before, the single currency once again updated the local highs of February 24, 2022, rising to the level of 1.1275, but could not consolidate there and still closed in the red zone following the results of the day session. The decline in the US currency is weakening as the two-day meeting of the US Federal Reserve approaches next week. Markets remain confident of a 25 basis point increase in interest rates to 5.50%, which could be the final rate adjustment in the current monetary tightening cycle. However, such an outcome is already included in the current quotes of the main instruments on the market, and investors will focus on the possible timing of the return of the US regulator to soften monetary conditions. Some experts suggest that it may occur no earlier than 2024. The European Central Bank (ECB) will also meet next week and is expected to tighten its rhetoric given the ongoing inflationary risks. Today, the focus of traders will be the June report on inflation in the eurozone: the Consumer Price Index is likely to remain at the level of 0.3% MoM and 5.5% YoY, while Core CPI is expected at 0.3% and 5.4%, respectively. The pressure on the dollar remains against the backdrop of yesterday's publication of macroeconomic statistics from the US: Retail Sales in June slowed down from 0.5% to 0.2%, while analysts did not expect any changes.

GBP/USD

The GBP/USD pair is developing a corrective impetus at the end of last week and is testing the level of 1.2963, updating local lows from July 13. Negative dynamics develops under the influence of technical factors, while the macroeconomic background changes slightly. Investors are closing part of short positions on the US dollar ahead of the US Federal Reserve's monetary policy meeting next week, as a result of which experts expect an interest rate increase by 25 basis points to 5.50%. In turn, the meeting of the Bank of England will be held in early August, and analysts predict the continuation of "hawkish" rhetoric. In June, the British regulator increased the cost of borrowing by 50 basis points to 5.00% to further fight inflation. June data on consumer price dynamics were published in the UK today: the indicator slowed down from 8.7% to 7.9% YoY, which is still well above the regulator's target levels of 2.0-3.0%, and on a monthly basis the rate was adjusted from 0.7% to 0.1%. In addition, today investors will pay attention to the June statistics from the US real estate market: it is expected that the volume of Housing Starts will be reduced from 1.631 million to 1.480 million, and the Building Permits may decline from 1.496 million to 1.490 million.

AUD/USD

The AUD/USD pair shows a moderate downtrend, developing a "bearish" corrective trend that is emerging in the short term. The instrument is testing the level of 0.6785 for a breakdown, updating local lows from July 12. The positions of the American currency are recovering after the active decline last week, which is facilitated by the approach of the next meeting of the US Federal Reserve. The US regulator is expected to raise interest rates by 25 basis points to 5.50%, which could be the last stage of tightening monetary policy in the current cycle. Until the end of the year, the Fed will probably maintain a wait-and-see attitude, although the possibility of another adjustment of the rate should not be completely ruled out. Macroeconomic data from the US, published the day before, did not provide any support to the US currency. Retail Sales in June slowed down from 0.5% to 0.2%, while market forecasts did not suggest any changes. Meanwhile, Industrial Production declined 0.5% from -0.2% in the previous month (later revised down to -0.5%), and Capacity Utilization corrected from 79.4% to 78.9%, while experts expected its growth to 79.5%. In addition, the minutes of the meeting of the Reserve Bank of Australia (RBA), which took place on July 4, were published on Tuesday. The document states that before deciding to keep the interest rate at the same level of 4.10%, officials discussed the possibility of adjusting it by 25 basis points. Moreover, the regulator fully admits that the "hawkish" course of monetary policy will continue in the future against the backdrop of high energy prices and falling production volumes.

USD/JPY

The USD/JPY pair shows moderate growth, developing an uncertain corrective trend formed at the end of last week. The instrument is testing the level of 139.30 for a breakout, trying to renew the local highs from July 12. The positions of the American currency are recovering as the meeting of the US Federal Reserve is approaching, which is again expected to raise interest rates by 25 basis points after a pause in June. At the same time, the expected adjustment of the rate may be the last in the current cycle of tightening monetary policy, which serves as a powerful resistance to the further development of "bullish" sentiment on the US currency. In addition, the macroeconomic background in the US also often turns out to be worse than its forecasts, which prevents the development of corrective sentiment in favor of the dollar. Thus, data on the volume of Retail Sales showed their sharp slowdown from 0.5% to 0.2%, while the figure excluding car sales fell from 0.3% to 0.2%. The volume of Industrial Production decreased by 0.5%, while the market was counting on the zero dynamics of the indicator. In turn, the Japanese Tertiary Industry Index in May accelerated from 0.9% to 1.2%, ahead of forecasts.

XAU/USD

The XAU/USD pair is consolidating, holding near 1975.00 and local highs from May 24, updated the day before, when the instrument showed a steady increase, which was partly due to the publication of macroeconomic statistics in the US. In particular, Retail Sales in June slowed down from 0.5% to 0.2%, while analysts expected the indicator to remain at the level of 0.5%, while Industrial Production showed a decrease of 0.5% instead of zero dynamics. Market activity remains rather weak today, as traders await the publication of data on consumer inflation in the eurozone, and also evaluate similar statistics from the UK, where the Core Consumer Price Index slowed down from 7.1% to 6.9%. In the meantime, the American currency is supported by the fact that the US Federal Reserve meeting, which will be held next week, is approaching. Analysts suggest that officials will raise interest rates by another 25 basis points to 5.50%. After that, the regulator is likely to take a wait-and-see attitude and return to changing the vector of monetary policy only at the end of this year or at the beginning of 2024.