Further to my initial potential trade idea, I still feel USD weakness is only temporary – it’s a matter of time before the upward trajectory resumes as the Fed turns increasingly hawkish. The next 24 hours or so will be key for the USD, as we receive the FOMC meeting minutes and Chicago Fed President Charles Evans delivers an economic briefing.
From the minutes, markets will be looking for some details around the QE exit strategy and communication surrounding potential rate increases. Any indication of fresh hawkish sentiment is likely to be USD-positive and negative for gold. However, if this doesn’t come to fruition, resistance in the $1,220 region could be tested.