US dollar traded sideways on Monday under the impact of comments from the Federal Reserve’s members. St. Louis Fed President Bullard suggested the economy is growing below trend around 2% while he sees the economy decoupling from risks overseas. San Francisco Fed President Williams said 2-3 rate hikes this year and 3-4 hikes in 2017 seems ‘right’. He also showed concerns that inflation expectations could be losing momentum.
EUR/USD is hovering around 1.1200. The euro zone’s May PMI turned out to be mixed, though the region’s manufacturing index missed the forecast making the composite index hit 16-months low. The euro met resistance at 1.1240 and looks vulnerable for decline to 1.1156/40, next support will be at 1.1100 (200-day MA). Further resistance is at 1.1300. Watch the release of German ZEW economic sentiment indicator at 09:00 GMT. In addition, the European finance ministers will meet to decide whether to grant Greece the next piece of bailout.
GBP/USD continued to decline after it reversed last week from the 1.4560 area. Support is in the 108.60 zone. The UK will release public sector net borrowing data at 08:30 GMT. The pound is still affected by Brexit concerns. The Bank of England’s Governor Mark Carney will testify on inflation and the economic outlook before Parliament's Treasury Committee at 09:00 GMT.
USD/JPY found some support at 109.50, though the picture on the daily chart still looks rather negative. Last week the pair failed to fix above the 55-day MA. To gain power the bulls need to overcome resistance at 110.50. Support is at 108.60.
AUD/USD was once again testing levels below 0.7200. Reserve Bank of Australia’s Governor Stevens will speak at 03:05 GMT. After the RBA surprisingly cut the benchmark interest rate this month and reduced inflation forecasts, the words of Stevens will draw much attention. Aussie is supported by 61.8% Fibonacci retracement of this year’s advance. Below 0.7175 (May 19 low) the next target will be at 0.7065. Resistance is at 0.7260 and 0.7330.