The Germany 30 index is under pressure, along with other EU equity markets. Concerns about a spike in global Covid-19 cases led to some profit-taking. Furthermore, some investors are worried about lofty valuations and prefer to stand on the sidelines as the earnings season unfolds. With expectations this high, there’s not a lot of potential for upside surprises and the air could quickly become thin for the stock market.
In the GER30, traders will be looking at the 15.155 level for support, followed by the major support zone between 14.485 and 15.000 points. The negative RSI divergence on the H4 chart is a bearish signal, and the test of 15.155 support could decide if the index will quickly bounce back from this correction or if losses will extend.
The US Dollar managed to regain some ground amid a risk-off theme, and this has stopped gold´s recovery for now. Traders will be closely watching the support area between $1753/59 – it was a tough battle to overcome this hurdle, and gold bulls will try to defend it. However, a clear break beneath $1753 could signal a false breakout and pave the way for another leg lower. The rising trendline from the March 31st low is also worth watching for imminent support.
The recent GBP/USD move higher does look a bit stretched in the near-term, and the RSI on the H4 is signaling that the currency pair has already entered overbought territory. A slight pullback could end up being healthy, and not endanger the prospect for further gains. The 1.40 is a key psychological resistance level, and the British Pound is likely to retest it soon. To the downside, traders will be keeping a close eye on the 1.3920 and 1.3890 levels for support.
USD/MXN has been in a slow and steady downtrend since March, and is now approaching a significant area of support between 19.55 and 19.70. The recent down move does look a stretched, and the currency pair could see bit of a bounce should it reach this zone of support. However, with the broad downtrend intact, sellers are likely to return on any larger rally.
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