By Orbex
The markets were trading cautiously albeit amid a slight risk-on sentiment prevailing. US stocks closed slightly higher while safe haven assets shed their recent gains.
President Trump said on Tuesday that he was not yet ready for a deal with China. The US dollar index posted modest gains on the day. The Case Shiller S&P Housing price index came out slightly lower than forecasts.
GBP Pares Gains as Hard Brexit Back on the Table
The pound sterling extended declines for the second consecutive session. The declines came as PM May prepared to leave 10 Downing opening the way for various contenders for the PM’s post. Some of the frontrunners are talking up the narrative of leaving the EU without a Brexit deal in hand.
The cable managed to briefly lift off above the resistance level of 1.2716 last Friday. But the sterling slipped back below this level. The GBPUSD moved back into its range of 1.2716 and 1.2606 by Tuesday’s close. This sideways range could be maintained in the short term, but there is scope for price to breakout. The breakout direction will likely determine the next leg in the trend.
Free Reports:
Following the recent conclusion of the EU parliamentary elections, focus shifts back to the Italian budget. Matteo Salvini, Italy’s deputy prime minister said that the economy could be hit with a fine of up to 3 billion euro for breaching the EU’s debt and deficit rules. Meanwhile, a number of top spots in the EU are expected to be filled shortly.
The ongoing tensions between the EU and Italy were seen weighing on the single currency. The euro gained 0.1% on the day but price remained close to a two-year low. The decline back below the 1.1182 handle puts the EURUSD into the sideways range. There is scope that further weakness could push the euro own to test 1.1140 level of support.
Gold prices were down 0.45% on the day on Tuesday. This follows the general market sentiment which remains cautious amid various narratives including the US and Iran tensions and the trade war with China which has now escalated into a tech war. The beleaguered Chinese firm Huawei has filed a legal action in a bid to end the current standoff.
The declines in gold prices on Tuesday saw the precious metal once again falling back to the 200-day EMA. The moving average has offered dynamic support on previous occasions. If it manages to hold the declines in gold once again, then we expect the sideways range to continue. However, watch for a possible decline in 1270 handle which could push gold prices down to the 1240 – 1250 level as the bearish trend gains momentum.
By Orbex