The Euro rose on Tuesday for the second session in a row as Dollar levels were weighed down by a sharp rise in the Pound Sterling yesterday.
Expectations are beginning to change for the ECB, especially as the Federal Reserve continues to pursue a tight Monetary Policy, as the monetary policy gap continues to expand between the two central banks.
Despite recent gains, the EURUSD pair still has to break above 1.2360 resistance levels to confirm a continued uptrend. A drop below support at 1.2330 would affect the recent uptrend and introduce a sideways trend.
The Sterling advanced, strengthening against the Dollar during the Asian session on Tuesday, reaching its highest level since February 16, following strong economic data released from the UK yesterday, and absence of economic data from the US Economy. However, the Federal Open Market Committee meeting starts this week, where the Federal Reserve is widely expected to raise rates and renew its commitment to two more hikes this year.
Technical reading shows that GBPUSD prices are trying to catch a breath after the recent strong rally. With no signs of a general upward trend change, a break in support levels at 1.4020 would allow prices to retreat further and likely test 1.3980 levels. A breach of near resistance levels at 1.4040 on the other hand, would re-establish a bearish trend causing a likely test at 1.4060 levels.
The safe haven USDJPY pair trades weak on Tuesday after attempting a recovery yesterday. Technical reading continues to show that prices are moving within the framework of a positive correction toward a general bearish trend.
Resistance levels at 106.30 and 106.45 are still considered the most important levels on the short term and the persistence of these levels would establish a bearish trend. At the same time, any indication of a change in direction on the short term, would negatively affect the movement of prices.
Gold witnessed weak trading during Tuesday’s session, as the precious metal tried to make a recovery, after recording a two-week low earlier today. Gold is still suffering from a decline in demand as a safe haven in the markets, generally. While Asian stock markets are showing a collective decline, Gold prices remain flat, nevertheless, yesterday’s recovery had only been an isolated reaction to the dollar’s movement.
The growing speculation that the Federal Reserve is on track to raise interest rates at its meeting this week, has also negatively affected the commodity markets, given that Gold as an asset does not provide immediate return to its holders, but rather a storage value.
Technical reading shows that the the yellow metal is trying to absorb the recent selling pressures. With no clear signals to a reversal of the overall bearish trend, if Gold price level manages to break through 1320 resistance, the market would likely correct higher, and possibly test a second resistance level at 1325 . A break of the support level at 1314 would however consolidate the bearish trend.