Two trades to watch: EUR/GBP, Gold

EUR rises despite Macron’s loss and after a rise in German PPI. Gold edges higher and tests 200 dma.

France

EUR/GBP rises despite Macron’s loss & as German PPI rises

The euro is rising despite disappointing election results for Macron over the weekend.

Macron became the first French President in the decade to fail to win an absolute majority in Parliament.

He fell short of the 289-seat threshold, although his alliance remains the largest bloc.

This means that Macron could struggle to pass legislation, putting his agenda at risk. The market reaction has so far been muted.

Separately, German PPI rose to 33.6% YoY a record high, suggesting that consumer prices will continue rising.

The ECB is set to raise interest rates in July and again in September.

Looking ahead Christine Lagarde is due to testify before the European Committee on Economic and Monetary Affairs.

Where next for EUR/GBP?

EUR/GBP trades above its 20 & 50 sma and above its multi-month rising trendline. The RSI is in bullish territory and is crossing above the 14-day average. Buyers will need to break above 0.8620 the May 12 high, opening the door to 0.5860 the September 29 high and 0.8720 the 2022.

On the flip side, support can be seen at 0.8540 the 20 sma, with a break below here opening the door to 0.8480 the June 10 low. A break below here would create a lower low. And expose the 50 sma 0.8473.

eurgbp chart

Gold rises as USD slips

Gold prices fell 1.70% last week on the back of the stronger USD and as central banks across the globe hike rates to combat surging inflation.

Gold is attempting to bounce higher at the start of the week, capitalising on USD weakness on the Junetenth Holiday in the US and testing resistance at the 200 dma.

The market mood is improving slightly on hopes of more measures in China to support the economy.

The economic calendar is light today. Over the weekend Fed speaker Christopher Waller voiced his supported for a further 75 basis point hike in July. Even the more cautious Raphael Bostic said the Fed should keep hiking in order to tame inflation.

Fed Powell is due to testify before Congress in the semi-annual monetary policy report later in the week.

Where next for Gold prices?

Gold trades below its multi-month falling trend line and the 50 sms. Gold prices ran into resistance at 1805 and rebounded high. The price is attempting to retake the 200 sma at 1844. The RSI is neutral, not giving away any clues.

Buyers will look for a close over the 200 sma in order to attack 1857 last week’s high, ahead of 1870 the 50 sma and falling trendline resistance.

Failure to rise above the 200 sma could see the price test 1830 the June 1 low ahead of 1805.


GOLD chart

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account