Volatility in the FX market remains at a subdued level, and the weak US Dollar is still the main theme. Inflation concerns and fears about an early rate hike by the Fed have eased somewhat, which led to renewed risk appetite and therefore less demand for safe haven currencies such as the Greenback.
The Euro regained some momentum following a period of consolidation, and a test of the 1.2350 resistance level seems only a matter of time. The RSI on the Daily chart is not showing overbought conditions yet, which may signal that there is more room the upside. Support is seen at the rising trendline from the May low, followed by 1.2160.
Similar price action can be seen in GBP/USD, where Pound bulls are patiently waiting for a new catalyst that could push the currency pair through 1.4235 resistance, which has once again proven to be a difficult obstacle. With the uptrend firmly intact, bulls have the upper hand. However, GBP/USD will have to clear this hurdle soon, as a failure to do so could lead to profit taking. Negative momentum could accelerate if the currency pair drops below the rising trendline from the May low and 1.41 support level.
XAU/USD extended gains overnight and is currently testing a major resistance level at $1898. A daily close above this level would be another victory for Gold bulls and pave the way for a continuation of the rally towards at least $1959. The precious metal is benefiting from both a weaker Dollar and inflation fears that continue to linger. This should keep Gold in demand in the near-term, and XAU/USD appears ready for the next leg higher following a healthy period of consolidation. To the downside, key support is seen at $1871, followed by $1850.
Equities had a mixed performance. While European investors were celebrating new record highs this week, the recovery on Wall Street has been rather slow. All eyes are on the technology sector, which was hit particularly hard during the recent sell-off. Inflation fears tend to drive a rotation from growth to value stocks.
Looking at the charts for USTECH, the breakout above the falling trendline from the record high and the 13.575 resistance level is a positive sign, and confirmed the short-term trading bottom at 12.926 points. The next major obstacle lies at 13.824 points and a clear breakout above this level could pave the way for a rally towards the record high at 14,076 points. The RSI on the hourly charts is not hinting at overbought conditions yet and the recent sell-off might have been a healthy for the index following its rapid rise.
The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.
US stimulus stalemate weighs on all markets; Oil perilously perched on the Covid curve; Traders sell the earnings news. Without stimulus, gold gets no bounce.