Market activity slows down before FOMC meeting

The key event of this week, the US Federal Reserve's meeting on Wednesday, is not likely to bring any significant news to the market. The economic background looks unsustainable, while the data from the labor market turned out ot be mixed. Thus, there is no reason to expect the optimistic sentiment under current conditions.

On Friday, the US Treasury published a regular report on the inflow of foreign capital for the period including January. The overall balance is at a minimum of July 2016. Notably, the outflow began once Trump's administration initiated a trade war with China. There is a massive exit of foreign investors from the US stock market while the indices are maintained close to the highs at the expense of domestic reserves. However, one serious event is enough to question the stability of the entire pyramid.

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The euro has a weak bullish trend on Monday. It is still not strong enough to predict the price to go above 1.1360-65. The pair is likely to trade within the range with the support at 1.1290/1300. Market players are not expected to make any serious moves before the new data is out. Currently, they are waiting for the FOMC meeting.

GBPUSD

Theresa May's proposal to extend the deadline for Brexit to June 30, 2019, may ultimately favor all interested parties. This postponement will allow the elections to the European Parliament to be held under usual conditions, while the likelyhood of a no-deal Brexit will be lowered, so the investments stop reducing. Uncertainty remains, yet its negative impact on the pound will lower allowing it to make an attempt for further increase.

The pound can take advantage of lesser tension with a high likelihood of testing the recent high of 1.3350. At the same time, strong movements are unlikely until March 20. The pair will be trading sideways until any news regarding the US dollar appears.

The material has been provided by InstaForex Company - www.instaforex.com

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