Global markets started the new week with choppy trading. Investors' erratic actions could be explained by the short trading week which is going to be full of events. In particular, traders will focus on the Fed announcement and the macroeconomic data from the US, including reports from the labor market. On Tuesday, Fed's Chair Jerome Powell will talk about the program of purchasing corporate bonds, and the next day the minutes from the last meeting of the US regulator will be published.

On the one hand, the changes in the monetary policy could calm down the markets while they will be analyzing new signals for further actions. Yet, this could lead to strong price fluctuations. As this is going to be a short business week, traders are likely to make their decisions by July 3.

In the US stock market, this could lead S&P 500 breaking through an important level of 3,000 points. On Forex, the EUR/USD pair is likely to hit the mark of 1.1200 and move lower to the level of 1.1000 afterwards.

EUR/USD

On Monday, the main currency pair was moving upwards to 1.1280 but failed to hold at this level. The pair pulled back in the course of the New York session. In the near future, the euro/dollar pair may follow the downtrend to as low as 1.1150. After passing this mark, the pair may drop even further. However, a serious structural reversal is possible only after testing the area of 1.1025–1.1000.

In general, the European currency has been trading mixed. The local issues of the eurozone are put on halt, and worries regarding a new outbreak of coronavirus are challenging German exports.

Today, the American currency has managed to make a rebound. However, it has formed a gap when trading against the basket of major currencies. The rebound in the US dollar can be viewed as promising only after the greenback wins back its losses. Worsening market sentiment can contribute to the dollar's advance.

The US dollar index opened this week in negative territory. Yet, it recouped its losses during the American session and edged higher to trade at around 97.50.

USDX

Last week, the US dollar gained ground and is now looking for further direction. Despite decreasing risk appetite, there are still many short positions opened on the US dollar. Traders tend to sell the greenbacks on hopes that the Fed will continue to inject liquidity into the market.

The British pound stays in focus this week. GBP/USD completed the last week's session at the level of 1.2340. Later on Monday, the rate was 1.2270. Despite the attempts to regain ground in the morning trade, the sterling failed to maintain momentum. In the meantime, the pound/dollar pair is likely to sustain a strong bearish trend.

GBP/USD

The US macroeconomic reports published on Friday indicate that the American currency may soon extend its gains. In addition, the signs that the Fed is going to stop pumping markets with liquidity have also supported the dollar. Last week, the Fed's balance sheet shrank by $75.5 billion, while a week earlier it dropped by $28 billion.

What is more, the persistent uncertainty around Brexit trade deal continues to weigh on the pound. Once again, trade negotiations have come to a standstill. The talks will resume soon but their outcome is unpredictable. Therefore, market participants remain rather skeptical about the pound's prospects.