The euro continues to outshine other currencies during early Wednesday trading. Interestingly, the dollar has lost more than 3% to the single currency over the last seven sessions as the markets move more firmly into risk-on territory. The euro, one of the most penalised currencies during the darker days of the coronavirus crisis, is now amongst the most buoyant ones, with investors feeling reassured by the gradual reopening for business of the European economies, as well as by the economic and political hopes offered by the European recovery fund.
EURUSD chart
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
The current bullish scenario leaves little space for investors to add gold to their portfolios as, despite the weakening of the US dollar, fund managers are trying to get quicker results jumping on stocks rather than betting on safe havens with the price of gold falling both yesterday and in early trading today as a result.
The main trend still appears positive for bullion, but in the short term it is continuing its lateral movement between $1,700 and $1,750 and is waiting for new market movers before taking a new clear direction.
Carlo Alberto De Casa – Chief analyst, ActivTrades
Risk-on is still the main story on stocks markets as investors are betting on a quick recovery of economies. This scenario, in conjunction with expectations for an extension of the cut by OPEC, is lifting oil. Moreover, the API released figures yesterday announcing a modest but surprising draw of half million barrels in the week ending May 29th. The whole scenario remains supportive for oil, although volatility will quickly return if the global economy starts to show any signs of weakness.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
Stocks opened higher not only in Europe but almost everywhere around the globe as investors’ risk appetite continues to grow in the middle of the week. The rally sparked by traders who first bet on a quick recovery is now gaining momentum. More and more investors are joining the buy side, trying to catch the train while they still can, boosted by growing stability for businesses and national economies now dealing with a less uncertain environment. This crowd effect offers strong support to the current rally with most benchmarks now trading near their three-month highs following the V-shaped rebound between March and April. As well as renewed global optimism, the market may already be pricing tomorrow’s new €500b stimulus plan from the ECB as well as Friday’s US jobs report. Even if the technical landscape doesn’t look threatening to prices, most markets are now trading near major resistance levels, which could lead to short-term corrections or lateral consolidations prior to the announcements later in the week.
The Stoxx-50 Index, still trading inside its bullish channel, is now entering the strong 65-points-wide resistance zone between 3,195pts and 3,260pts. A clearing of this zone would drive prices higher towards 3,360pts and 3,465pts by extension while a failure below would take the market back to its first support just above 3,105pts.
