Risk appetite fell on Monday so stock indices and US treasure yields dropped sharply. Most likely, market volatility surged because Fed Chairman Jerome Powell was hawkish in terms of the prospects for further rate increases, which, oddly enough, also led not to the growth of dollar, but to its weakening, which is rather unusual.
Possibly, the decrease in dollar is simply caused by the closing of long positions as the market is already confident that rates will rise by 0.75% to 3.25% in September. Another factor could be the impending rate hike by other central banks, which may eventually lead to the reversal of market sentiment.
Today, trading in the European stock market began mixed. The focus is on Germany's data on consumer inflation, where prevailing positive sentiment is likely to return risk appetite, while at the same time lower dollar demand. In the forex market, activity will increase before the start of the US session because of extremely high volatility.
Forecasts for today:
XAU/USD
The pair is trading above 1730.00. However, increased selling pressure will bring the quote towards 1713.70.
GBP/USD
The pair is consolidating above 1.1685. Increased selling pressure will push the quote to 1.1600.