Recent market sentiment has been on a rollercoaster ride, as fear and hope alternate in driving risk appetite. Early Thursday trading is definitely a day marked by a risk-on stance, with the US dollar and other safe havens retreating, while the euro, and risk related currencies in general, are on the rise. This latest bout of optimism has been sparked by news emerging of some success in early-stage human trials for a vaccine against COVID-19.
EURUSD chart
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
Expectations for a quick economic recovery and for a vaccination against Covid-19 have curbed gold’s rally, forcing down its price by $20 immediately after it had reached a new 8-year-high. The quick return of risk on mode on stock markets has pulled liquidity away from gold with investors instead eyeing up the potential for quicker returns on equities. Technically the spot price remains above May’s peak of $1,763, confirming the positive long-term scenario. In the short-term, the area between $1,790 and $1,800 represents a valid resistance area and this may stall any initial recovery attempts.
Carlo Alberto De Casa – Chief analyst, ActivTrades
European shares traded significantly higher on Thursday, continuing the bullish trend from Asian stocks and extending yesterday’s gains amid a renewed appetite for risk. Yesterday’s news about Pfizer and BioNTech’s successful vaccine trial turned market sentiment upside down as it came while investors were preparing to redirect their exposure from risk assets to safe havens as a result of the recent jumps in new virus cases in many hotspots. This positive development in the battle against the virus finally provides investors with more clarity and is likely to result in a much clearer direction in market movements in the near future. Even if the mood is now clearly bullish on stocks, today’s trading session could still be volatile as traders brace for the highly anticipated US jobs report for June due later today, ahead of tomorrow’s bank holiday.
Today’s best performance comes from Spain where the IBEX-35 Index is trading near resistance at 7,410pts. The sharp upward move followed a bullish break-out that validated a triangle pattern and has opened the path not only to 7,410pts but also to 7,520pts and 7,635pts by extension. The 21-period moving average is now rising and the Stochastic indicator is in its overbought zone, indicating an acceleration of the trend.
