The trading week started with risk-on dominating market sentiment. The safe haven dollar is retreating, while risk-related currencies, such as the euro and the Australian dollar continue the upward trend initiated last week. Confidence among market operators derives from hopes that the economic recovery, seen since the easing of lockdowns, will be sustainable as consumption continues to edge closer to pre-pandemic levels. With another earnings season starting this week, the current optimism could also result from investors’ belief in better results than would have been expected only a few weeks ago.
EURUSD chart
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
The gold price is consolidating above $1,800 with bullion holding onto this significant threshold despite stocks in green. This confirms investors’ huge appetite for the yellow metal in this uncertain phase on markets. Technically, apart from the psychological level of $1,800, we can see a first support at $1,790. As long as the price remains above this level, the bullish movement will continue, pulling up the price to new highs.
On a separate note, the trend remains positive also for silver, with the spot price again above $19 as investors are betting on a quick economic recovery.
Carlo Alberto De Casa – Chief analyst, ActivTrades
European shares opened significantly higher at the start of a busy week, following a clearly bullish Asian trading session overnight. While new coronavirus cases continued to grow significantly over the weekend, with lockdowns even coming back in certain hotspots, investors’ focus is targeted towards the opening of earnings season this week. The optimistic mood remains with investors expecting solid corporate results which would be likely to provide stock markets with renewed momentum that would allow the current rally to extend to new highs. However, the fact that gold is still trading above $1,800 indicates traders are also seeking to hedge their exposure to stocks with safer havens in case corporate results disappoint and global uncertainty resurges. Even if the risk appetite remains high so far, some investors still don’t know if this earnings season will be a festival or a bloodbath.
The Stoxx-50 Index continues to trade well above 3,300pts today with banking shares and the travel and leisure sector driving the benchmark higher. The price had a slight pull-back to 3,325pts following a failure below 3,350pts (76.4% Fibonacci). A clearing of 3,350pts would open the way to new targets at 3,365pts and 3,376pts by extension while further support levels can be found in the range between 3,320pts and 3,325pts and then at 3,312pts.
