It’s only Tuesday and the currency and commodity markets have been absolutely wild. The EUR/USD blundered and lumbered, attempted and failed to regroup. The pair made an equally sharp turn back under the 1.1100 line, largely on the continued resurgence of the US Dollar’s strength. At the same time, GBP/USD met major resistance near the 1.3220 area, with the pair’s intraday recovery retreating sharply. Gold prices behaved in a similar manner. After starting the week under pressure, they fell back down toward the $3,200 mark per troy ounce.
EUR/USD, which looked like it might be finding a bottom this morning, found its recovery efforts thwarted as the US Dollar found a bid. Thus the currency pair falling down to below 1.1100 shows a major change in market perception. Traders are keeping an increasingly close eye on economic indicators, which might further push or pull the direction of the Euro against its American counterpart.
There are plenty of reasons behind the US Dollar’s recent strength. One major reason is the optimism over stronger, possibly more aggressive, monetary policies from the Federal Reserve. Additionally, analysts have noted that a strengthening dollar typically weakens other currencies. This complex has created additional focus and stress on currency cross rates like the EUR/USD.
For GBP/USD, the pair struggled to break above 1.3220, where it faced major resistance. This price point recently turned into an important fulcrum for investors to balance bullish bearish sentiment. Unless there is a significant turn in market sentiment, the British Pound will likely have difficulty maintaining its increase versus the Dollar.
Gold prices, too, were a reflection of the market pressures at play. GOLD After opening the week on the back foot, gold tumbled below $3,200 per troy ounce. A trader told CoinDesk that increasing resistance around the $3,250 level is becoming apparent. This troubling trend foreshadows difficulties for investors looking to use gold as a safe-haven asset during these turbulent times.
The relationship between these currencies and commodities further demonstrates the instability and chaos currently suffusing financial markets. Click to enlarge Investors haven’t fully recovered their confidence, as they await more economic data and signals that would change the narrative and expectations going forward.
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