All is well that ends well – Market Analysis – July 21

All is well that ends well – Market Analysis – July 21

After intense debates, EU officials reach a historic accord in providing Support for the EU countries

The highlight came in the early hours of the European morning, where European leaders reached a compromise on the recovery fund.

This led to a fall in Euro in a "sell the fact" move, with EUR/USD declining from 1.1460 to a low of 1.1423, and then returning to levels near previous highs.


But the headlines sparked a better market tone with a return to risk-on mode. The peripheral countries' indices jumped upwards, in the case of Spain35, it slightly exceeded the first resistance around 7600 with a rise of around 1.5% and then consolidated in a corrective movement.


The agreement reached in Europe on the implementation of the next generation fund represents a historic milestone.

For the first time, a joint bond issue that mutualizes risk will be carried out. It is a giant step in the evolution of the European Union that consolidates the monetary and fiscal union and undoubtedly reinforces the Euro's position as the single common currency.

The lack of bullish movement in EUR/USD, which, for the moment, has not managed to overcome the barrier of 1.1500, is mainly due to the long over-positioning of market participants who, in a way, had already anticipated this fact with purchases of Euros.

In addition to the strength factor of the first issue of mutualized bonds by the European Union, the possibilities of a faster recovery of the economies of the European Union member countries are increased, as the German Minister of Finance stated.

US Dollar & Commodities

The Dollar has weakened notably against the other currencies in a scenario of greater risk appetite. In the case of AUD/USD, it has exceeded its intermediate resistance of 0.7060 and points towards theoretical targets of 0.7200 and 0.7290.

This movement is supported by the spectacular behavior of commodities, especially metals, which continue with consecutive highs in recent days.

GOLD climbs to $1840 and steadily to the record highs of 2011 at $1920. In analysts' opinion specialized in this precious metal, the probability that these levels of historical maximums will be exceeded is high.

This keen investor interest in metals has awakened SILVER, which has experienced a rise of around 5% and has placed it right at its main resistance level at $21.

Once this level has been exceeded, an upward trend would start that will take it out of the lateral movement of the last six years and have medium / long-term objectives in $25.25 - $26.


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