Sterling found itself slightly pressured during Monday’s trading session after reports of the European Union adopting a hard line stance on Brexit rekindled Brexit-related jitters. The downside was fuelled by Prime Minister Theresa May renewing her threats to walking away from the European Union without any deal in place. With the Brexit uncertainty, imbalances in the UK economy and political instability weighing on sentiment, Sterling could be exposed to further downside risks in the medium to longer term.
From a technical standpoint, Sterling/Dollar is bullish in the short term and the breakout above 1.2875 has opened a path towards 1.3000. If bulls fail to conquer the 1.3000 level, then prices may descend back towards 1.2875 and 1.2775 respectively.
EURUSD hugging 1.0900
The speculations over the European Central Bank maintaining a dovish stance in the short to medium term has enticed bears to repeatedly attack the EURUSD below 1.0900. Although there is confidence towards the Eurozone’s economic recovery, the political uncertainty and external risks may force the central bank to remain on standby. With anxiety set to heighten ahead of the second round of the French presidential elections, the Euro could find itself under renewed selling pressure. While a victory by Emmanuel Macron has the ability to elevate the EURUSD higher towards 1.1000, an unexpected victory by Marine Le Pen could still open a path to parity.
From a technical standpoint, a breakout and daily close above 1.0900 could encourage a further incline higher towards 1.1000. In an alternative scenario, a failure for bulls to secure control above 1.0900 may open a path towards 1.0800.
USDJPY breaks above 111.60
A resurgent Dollar simply installed USDJPY bulls with enough inspiration to break above the 111.60 resistance level during Monday’s trading session. Although prices somewhat bearish on the daily as there have been consistently lower lows and lower highs, the bearish trend may come to an end this week if bulls secure a solid daily and weekly close above 111.60. From a technical standpoint, the MACD still points to the downside but the momentum indicator is in the early stages of turning positive. A solid break above 111.60 may encourage a further incline higher towards 113.50. In an alternative scenario, repeated weakness below 111.60 may open a path back towards 109.00.
AUDUSD challenges 0.7500 resistance
The AUDUSD was heavily bearish last week with the currency concluding the month below 0.7500. The monthly close below this psychological level could signal for further downside in the medium to longer term. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. Previous support at 0.7500 may transform into a solid dynamic resistance that encourages a further decline lower towards 0.7350. In an alternative scenario, a daily close back above 0.7500 may suggest a further incline higher towards 7570.
Commodity spotlight – Gold
Gold was under pressure during Monday’s trading session with prices struggling to keep above $1260 as of writing. Although uncertainty and geopolitical tensions have supported the yellow metal in the medium to longer term, short term bears are currently in control. From a technical standpoint, a breakdown and daily close below $1260 could open a path towards $1240. In an alternative scenario, bulls need to keep above $1260 for a further incline back towards $1280.