A quiet session so far this Wednesday in which the euro is showing modest gains versus the dollar and other safe havens. Investor bias towards the single currency appears to be positive, reflecting hopes of a quick economic recovery as well as greater harmony between the different member states in the aftermath of the pandemic.
Tomorrow’s Eurogroup meeting will be one to watch; the finance ministers of the EU member states will meet and vote to choose the replacement for the outgoing president Mario Centeno. The choice will either confirm the current perception of a more peaceful coexistence between north and south, which will be positive for the euro, or reopen old wounds that will weigh down on the single currency.
EURUSD chart
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
The gold price has once again broken its previous high. Investors are still buying stocks but it seems they want to be covered in case of any market correction. It is little surprise that the original safe haven is continuing its rally, simply because the number of buyers is comfortably exceeding the number of sellers.
It is worth pointing out that in March there wasn’t an immediate panic selling of gold but in the very short-term bullion was sold as investors were looking for easy cash in order to avoid margin calls from other losing positions. This could happen again temporarily if there was a violent correction on indices but the long-term direction is clearly positive.
Carlo Alberto De Casa – Chief analyst, ActivTrades
European stock markets registered a light retreat on Wednesday following a mixed trading session in Asia, while U.S contracts also point to a weaker open as the consolidation continues on riskier assets. These bearish corrections, of limited magnitude so far, are mostly perceived as “healthy” by investors following the strongest rally of the year in equity markets.
However, some market operators also fear the renewed momentum of coronavirus may impact the pace of the recovery as it is likely to delay investments from businesses and consumers’ demand in some specific sectors, turning the current consolidation into a more sustained decline. Most Eurozone benchmarks are trading lower today with financial and energy shares at the bottom of the table while traders patiently wait for this afternoon’s US crude oil inventories alongside the EIA’s report.
The worst European performance comes from the Spanish IBEX-35 Index after the market opened well below 7,400pts. The price has continued its bearish correction, inside their mid-term bullish channel, following the failure below 7,625pts. Bollinger Bands are narrowing, a sign of a decreasing volatility, while the price is testing its first available support at 7,350pts. A break-out of this zone could extend the current correction towards the lower band, near 7,110pts.
