The US dollar posted strong gains amid a risk on sentiment which saw the safe-haven assets losing ground. Meanwhile, commodities such as gold and silver extended strong declines on the day.

Economic data was relatively quiet on Monday. Eurozone Sentix investor confidence improved, with the index rising to -2.2, beating estimates of -3.1. In the UK, construction PMI fell to 49.5, marking a contraction in the sector.

The NY trading session saw the release of construction spending which posted a decline of 0.6%. This was worse than the forecast of 0.2% and dropped from 0.8% in the month before.

The Reserve Bank of Australia held its monetary policy meeting earlier today. As widely expected, the central bank left interest rates unchanged at 1.50%. The decision to leave rates unchanged comes ahead of key economic reports due later during the week.

The European trading session will kick off today with IHS Markit releasing the monthly services PMI reports. Expectations are for the eurozone services PMI to remain steady at 52.3, but we can expect the Italian and French services sectors to post a contraction.

As for the UK’s services PMI, expectations are for a decline to the 50.0 level on the index. This marks a modest drop in activity from 50.1 in January. Forecasts indicate that retail sales for the eurozone may show an increase of 1.3% after they fell 1.6% in the month before.

The NY trading session will see the release of ISM’s services PMI report. The non-manufacturing activity is expected to rise to 57.4 in February, up from 56.7 in January. Later in the day, the BoE governor, Mark Carney is scheduled to speak.

EUR/USD Intraday Analysis

EUR/USD (1.1328): The EURUSD currency closed on a bearish note yesterday following the previous two days of consolidation. Price is back near the support level of the 1.1327 region. With the support being tested once again, there is scope for further downside. A break down below 1.1327 – 1.1309 could signal further losses that could send the euro currency lower to the 1.1256 level of support. In the longer term, the EURUSD remains range bound.

USD/JPY Intraday Analysis

USD/JPY (111.89): The USDJPY traded somewhat muted on Monday. Price action closed bearish, but the overall momentum remains to the upside. The bullish momentum remains in place with the USDJPY likely to target the resistance level at 112.50. A retest of this level to establish resistance will mark the completion to the upside. Alternately, with the recently breached resistance level at 111.21 exposed, the downside could bring the USDJPY to test this level of support.

XAU/USD Intraday Analysis

XAU/USD (1288.35): Gold prices extended declines for the fifth consecutive daily session. Price action closed near intraday lows of 1282.74 before slightly pulling back higher. We expect the bearish momentum to continue pushing gold prices lower toward the 1280 handle where support is most likely to be established. Following the test of support near the 1280 level, there is scope for gold to rebound in the short term. The breached support at 1305.72 remains a key level where resistance could be tested. However, if gold prices exceed the current level, further gains could push prices toward the 1321.60 level which would mark the breakout from the rising median line.