EUR/USD Price May Fall Below 1.1600, and Gold Hints Testing Lower Levels

By: Miguel A. Rodriguez

11:33, 23 September 2020

1600849525.jpg
Equity markets rebound, geopolitical tensions, and the US dollar rallies, what moves the indices, FX, and commodities markets today?

The RBNZ has kept interest rates unchanged at 0.25% and agreed to continue with the Large-Scale Asset Purchase (LSAP) program up to $100 billion. Additionally, the committee reaffirmed that a Funding for Lending Program (FLP), a lower or negative OCR, purchases of foreign assets, and interest rate swaps remain under consideration.

Equities 

Global stock markets rebounded on Tuesday, yet the market’s fundamental has not changed. This move is likely technical as some traders seemed to exit their short positions. The market risk appetite is still weak, and the US dollar continues to gain territory. 

The US-China tensions continued as the US president demanded to hold Beijing accountable for having unleashed Covid-19, while China accused him of lying. 


 Stock Market

Change %

S&P 500

+0.6%

Dow Jones

+0.5%

NASDQ

+1.0%

Japan 225

+1.2%

DAX 30

+0.1%

FTSI 100

+0.7%

CAC 40

-0.6%


 Currencies 

The US dollar rallied on Wednesday against a basket of currencies due to Coronavirus unease in Europe and the UK , and on the Fed member Evens statement that the Fed could raise the US interest rates before inflation starts to average 2% however, he warned of a slower recovery if the Congress fails to pass an additional fiscal stimulus package. 

The US Dollar index has risen to an eight-week high at 94.22. The index broke above the neckline of the inverted head and shoulders at 93.50 eyeing a test of 95.50.  On the other hand, EUR/USD changed its outlook to negative and provided two bearish signals, the first was breaking below the neckline of the head and shoulders pattern located at 1.1775, and the second was closing below 1.1713. As a result, the pair may press towards the 1.1500 threshold. 

GBP/USD retreated on Tuesday and closed below 1.2773 and changed its technical outlook to negative. The pair may press towards 1.2505.  

Commodities 

The oil price slipped due to a stronger US dollar price and reports of an increase in the US crude stockpiles adding to that lower global demand caused by coronavirus concerns. 

Brent oil closed below $42.50 hinting that the price may press towards $39.60, while the US Crude could fall towards $38.37. 

The Gold price gave a negative signal after closing on Monday below $1,921. The yellow metal continued losing value on Tuesday eyeing a test of the low end of the current $1.921- $1,859 trading zone.

Looking Ahead 

Markets expect the PMI flash numbers for September in the Eurozone, the UK, and the US respectively at 9:00 AM, 9:30 AM, and 2:45 PM (GMT) then eyes will be the US oil inventories and the Fed chair testimony before the US congress at 3:00 PM (GMT), finally Fed members Evan and Quarles speak at 7:00 PM and 10:00 PM (GMT).  


Share this article

This information prepared by capex.com/za is not an offer or a solicitation for the purpose of purchase or sale of any financial products referred to herein or to enter into any legal relations, nor an advice or a recommendation with respect to such financial products.This information is prepared for general circulation. It does not regard to the specific investment objectives, financial situation, or the particular needs of any recipient.You should independently evaluate each financial product and consider the suitability of such a financial product, by taking into account your specific investment objectives, financial situation, or particular needs, and by consulting an independent financial adviser as needed, before dealing in any financial products mentioned in this document.This information may not be published, circulated, reproduced, or distributed in whole or in part to any other person without the Company’s prior written consent.
Past performance is not always indicative of likely or future performance. Any views or opinions presented are solely those of the author and do not necessarily represent those of capex.com/zaJME Financial Services (Pty) Ltd trading as CAPEX.COM/ZA acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via CAPEX.COM/ZA, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15.  Magnasale Trading Ltd is the principal to the CFD purchased by investors.