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Daily market commentary: The euro continues to lose ground to other major currencies



FOREX

The euro continues to lose ground to other major currencies during early Wednesday trading in Europe. As investors process the full implications of yesterday’s ruling by the German Supreme Court, which effectively blocks the Bundesbank from participating in the ECB’s public sector purchase program, the single currency hit its lowest level in more than 3 years versus the safe haven Japanese yen. The German court’s decision is like a bucket of cold water thrown over those that expected greater cohesion and solidarity between the various member countries of the single currency to try and overcome the tough challenges ahead.

Ricardo Evangelista – Senior Analyst, ActivTrades

GOLD

In the last few days, we have seen stocks going up, then declining and later recovering again. Despite all these movements, the price of gold has remained relatively stable. The correction seen on Thursday and Friday morning was followed by a strong recovery to the key level of $1,700. Volatility seems to have disappeared this week with bullion waiting for a fresh stimulus and the spot price continuing to trade either side of the threshold of $1,700. Technically the trend remains bullish, as investors are still buying gold as insurance in case of a second wave of coronavirus, while central banks are forced to print large quantities of money to mitigate the crisis generated by the pandemic and the consequent lockdown.

Carlo Alberto De Casa – Chief analyst, ActivTrades

Daily Market analysis

EUROPEAN SHARES

Uncertainty reigns on risky assets in the middle of the week as investors around the world are now torn between contrasting drivers. On the one hand traders know that the peak of the virus is likely to have passed and the end of the crisis may be in sight, paving the way for rising demand in all sectors. Meanwhile investors also welcomed the fact President Trump is said to be thinking of another batch of relief measures, including rate cuts and a variety of deductions to help businesses, workers and investors. However, on the other end traders’ concerns are growing about the relationship between the US and China after Washington questioned Beijing’s behaviour about the origin of the global pandemic. A renewed trade war between the two blocs would smash market sentiment before the summer period and would be devastating for businesses, especially if there was a second wave of the virus.

European markets have continued their slide so far and the CAC-40 from Paris is one of the eurozone’s worst performers. The market is trading just below its 21-day moving average but above its very short-term support zone at 4,430pts where a break-out could quickly lead prices back to 4,355pts.

Pierre Veyret– Technical analyst, ActivTrades

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Daily market commentary: The euro continues to lose ground to other major currencies

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