Following a volatile week, we start today with both the US and UK markets closed due to bank holidays. This leaves most of the heavy lifting to the Asian and Frankfurt markets. Economic data is sparse. Over the weekend, the EU parliamentary elections were held, but the impact on the euro is muted.
Crude Oil Bounces on Weekend Profit Taking
Oil prices were recovering from the weekly lows as investors booked profit into the close of the week. Oil prices fell after the US weekly crude oil inventories posted a surplus. Furthermore, speculation is rising that OPEC and Russia will cut production at the semi-annual OPEC meeting in June. The decline to the 57.50 level marks an expected correction in the larger term uptrend that oil prices are in right now.
WTI Crude Oil Could Maintain the Gains
The rebound from the 57.50 support level marks a test of the price area. The previously breached support level of 60.33 region could act as resistance if price continues the upward trajectory. In the near term, WTI crude oil could maintain the gains within the said price band. There is a risk that price could eventually retreat which will put the support at 57.50 at risk. It is likely that oil prices will further extend declines down to the 50 handle in the medium term.
UK PM May Resigns After Failing to Deliver Brexit
The Brexit drama and the political fallout eventually lead to the British Prime Minister, Theresa May announcing her resignation on Friday. Her resignation was widely expected amid growing opposition and her failure to deliver Brexit. The British pound reacted positively as the cable jumped 0.45% on the day.
Can GBPUSD Maintain the Upside Bias?
The GBPUSD briefly slipped to a four-month low last week before breaking higher. By Friday’s close, the sterling was seen stalling near the immediate resistance level of 1.2716. With the range being established within 1.2716 and 1.2606, we expect some sideways consolidation. Only a breakout from this range will determine the next direction in the trend. The bias is to the upside if there is a successful breakout above 1.2716 on a daily closing basis.
Gold Price Hold Gains Into Weekly Close
The precious metal held the weekly gains into Friday’s close. The recovery in gold comes as investor concerns are high on the trade tensions. The markets were in a risk-off mode for the most part last week. This led to a gain in safe haven assets including gold and the Japanese yen.
XAUUSD Stands at a Key Level
Friday’s recovery saw gold prices retracing the intraday losses as price closed back near the 1285 resistance level. This will be key as a strong breakout from this level could indicate a possible shift in the trend. On the other hand, if the resistance area near 1285 holds, gold prices will be looking at further declines. Prices could slip to the 1240–1250 region in the near term.