The dollar remains under pressure during early Tuesday trading and risk-related currencies, such as the euro, are on the front foot, following the Fed’s renewed demonstration on Monday of being ready to do whatever it takes to ensure economic stability. After a wobble at the end of last week and despite growing concerns over a potential second wave of the pandemic, risk-on sentiment is once again taking over, backed up by the Federal Reserve’s safety net.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
After a new decline to $1,700, gold’s spot price has once again managed to recover to $1,730. This is showing the resilience of bullion in the current uncertain scenario. Every time the price falls, it seems that investors are seeing it as a buying opportunity more than time for further selling. Despite the recovery of stock markets seen in April and May, appetite for bullion remains significant.
Technically, a new fall below $1,700 would denote weakness, while a first negative signal will only arrive below $1,675. Vice versa, a clear break through $1,740 can open the way for further rallies to the 7 ½ year high at $1,765.
Carlo Alberto De Casa – Chief analyst, ActivTrades
European shares traded significantly higher on Tuesday, with similar gains on both Asian stocks and US futures on the S&P 500. This bullish trading stance took hold during yesterday’s US session when both the Fed and Washington tried to reassure investors against rising virus numbers. While the Fed will start buying corporate bonds on Tuesday, Washington unveiled a $1 trillion infrastructure spending plan, aiming to provide further support to the economy, which gave an immediate boost to market sentiment. Risk appetite is currently mostly driven by two powerful but opposite levers: the fear of a second virus wave and the batch of fiscal and monetary measures put in place by governments to sustain growth. Due to this, there is a high chance that macro data, like today’s US Retail Sales, will be overshadowed by these two drivers on the short-term basis as traders have one question in mind: will the stimulus measures be enough to offset the impact of a potential second wave to our economies?
Technically, the DAX-30 Index failed to clear its double resistance near 12,320pts and now is heading back to its opening price. However, the market remains well supported by the zone at 12,150pts even if a pull-back towards 12,075pts remains possible today. A climb above 12,320pts could take the market higher towards 12,500pts and 12,735pts by extension.
