OPEC and the FOMC meetings are the main events of the trading week ahead, and the dollar’s bearish trend continues.

This week’s two major events will be the US Federal Reserve’s interest rate decision and the OPEC meeting. The US dollar and oil are both at inflection points as traders prepare for increased volatility during and after the two meetings.

Meanwhile, market participants are still digesting the message sent by Christine Lagarde at the previous ECB meeting. After a small decline to the 1.20 level, the EUR/USD bounced strongly, breaking above the 1.21 level at the start of the trading week.

The US and European equity markets remain strong, and this week is particularly important because of major tech companies — including Microsoft, Tesla, and Apple — releasing their earnings.

Crude oil is down more than 1% today as investors prepare for OPEC’s message later in the week. Gold and silver started the week flat and will likely see increased volatility once the Fed reveals its next move and the dollar reacts.

Daily Analysis

Today should be a slow day due to a lack of economic events. One event is the German Ifo survey that shows how businesses are performing, but this is a lagging indicator that rarely moves the markets. Another event is the US Core Durable Goods Orders update, which will suggest an even stronger economic recovery if the increase is greater than the expected 1.6% on a month-over-month (MoM) basis.

All in all, traders will likely use today to position for the main event on Wednesday. As such, the dollar is unlikely to continue its downward trend.

Markets to Watch

The crude oil, EUR/USD, and GBP/USD markets are in focus today.

Crude Oil

Crude oil got rejected from the apex of a contracting triangle. The $60 level looms large as traders look for any hints about how the cartel plans to accommodate supplies from a possible Iran deal.

EUR/USD

This chart (inversely) reflects the declining dollar during the past three weeks. The EUR/USD pair had previously found strong support at the 1.17 level and is now considerably higher due to a weak dollar rather than a strong euro. The 1.20 level still looms large despite the dollar continuing to trade with a weak tone.

GBP/USD

A similar situation is apparent on the GBP/USD pair, only this time at the pivotal 1.40 level. So far, “cable” has bounced from the rising trendline, and the Fed meeting should determine the future direction.

Winners and Losers

The dollar remains offered as it is sold on every bounce, while the euro started the week on a strong note.