Gold stumbled to a fresh one-week low on Tuesday as cautious optimism over global trade developments boosted risk sentiment and dampened appetite for safe-haven assets.
A stabilizing Dollar compounded to Gold’s woes with prices sinking towards $1320 as of writing. While the precious metal is susceptible to further loses in the near term, the medium to longer term remains in favour of bulls. Market expectations over the Fed cutting interest rates this year coupled with global growth fears should shield Gold from downside shocks. Technical traders are likely to closely monitor how prices behave below the $1324 support level. Sustained weakness below this level should encourage a move back towards the psychological $1300 level. For buyers to jump back into the game, prices have to secure a weekly close back above $1324.
EURUSD hovers above 1.1300
The story defining the Euro’s recent appreciation continues to revolve around Dollar weakness and a less ‘dovish’ than expected European Central Bank (ECB).
Regardless of recent gains, the Euro’s outlook remains tilted to the downside given the storm of domestic and external headwinds hitting the Eurozone. With the fundamentals behind the Euro bearish and the longer-term trend on the weekly pointing south, bears remain in the driver’s seat. A breakdown below the 1.13 level is likely to signal a move back towards 1.12 and 1.10, respectively. Should 1.13 prove to be reliable support, the EURUSD has the potential to test 1.1480 and 1.1550, in the medium to longer term.
Pound struggles to conquer 1.2700…
It has been a relatively positive trading day for the British Pound which has appreciated against almost every single G10 currency except the Norwegian Krone.
Although Sterling bulls seem to be in the building, investors should be under no illusion that they are here to stay. With Brexit uncertainty and political risk in Westminster denting buying sentiment towards the Pound, the upside remains limited. In regards to the technical picture, the GBPUSD remains under pressure on the daily charts with price trading marginally below 1.2700 as of writing. Sustained weakness below this point may signal a move towards 1.2620 and 1.2500. Alternatively, a breakout above 1.2750 is seen opening the doors towards 1.2840.
Yen weakened by risk-on sentiment
The improving mood across financial markets is set to weaken appetite for safe-haven assets like the Japanese Yen. With the Yen on the backfoot, the USDJPY has scope to push higher towards 109.00 in the near term. However, the currency pair remains in a bearish trend on the daily charts as there have been consistently lower lows and lower highs. Should 109.00 prove to be a reliable resistance, the next key point of interest for the USDJPY is likely to be found around 107.80. A scenario where bulls are injected with enough inspiration to break above 109.00 will open the doors back towards 110.00.
Is the EURJPY experiencing a technical rebound?
The EURJPY may be in the process of a technical rebound on the weekly charts with support around 120.60 acting as a bottom. Bulls are likely to re-enter the scene if prices can push back above the 123.50 resistance level. Should this point proves to be a stubborn resistance, then the EURJPY is likely to sink back towards 120.60 and 119.50, respectively.