The dollar is gaining ground versus its peers during early Tuesday trading, as market concerns over the spreading of the Delta variant continue to grow. The greenback is once again on the front foot, with new lockdowns being put in place in the Asia-Pacific region and the European summer looking dimmer than it did only a few weeks ago, when the stepping up of the vaccination program promised a speedy economic recovery. The euro in particular appears vulnerable to the unravelling of the recovery trade and could soon test fresh multi-month lows against the dollar, as the new variant becomes widespread across the continent.
The gold price is declining during early Tuesday trading, weighed down by the strengthening of the US dollar. The markets appear increasingly unsettled by the Fed’s taboo on inflation, with a growing number of investors taking a net view that the central bank’s ambiguity, mixing a new hawkish stance with dovish declarations from some officials, will ultimately translate into higher interest rates sooner than previously expected. Such a scenario is likely to support further dollar gains and, therefore, generate more short-term losses for gold.
European shares are trading slightly higher on Tuesday, despite an Asian trading session controlled by bear traders amid uncertain market sentiment. Investors are digesting the latest evolution of the Delta variant, which is increasingly seen as a growing threat to the ongoing economic recovery in many areas. Even if the economic impact is unlikely to be significant in countries like Canada, the UK, the US and western Europe, which have benefited from an efficient vaccine rollout, the inconsistency in vaccination campaigns in other parts of the world is likely to lead to an uneven recovery. This uncertainty is noticeable on most charts with consolidation patterns continuing.
The DAX-30 Index is still trading sideways but close to its immediate resistance at 15,665pts. A break-out of this level could unlock an extended upward potential towards 15,760pts and ultimately to 15,800pts.
Pierre Veyret– Technical analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
