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Daily market commentary: The euro continues to strengthen against other currencies



FOREX

The euro continues to strengthen against other currencies, including the dollar and the yen, which have been two of the most sought-after safe havens during the coronavirus crisis. The single currency’s weekly gains versus the greenback are touching 1.3% during early Wednesday trading, as investors see some light at the end of the tunnel for a monetary union that has been tested during the COVID-19 pandemic.

After weeks of disagreement and bickering between member states, it appears that the Franco German proposal, for a common recovery fund that will be shared under the EU budget, may be gaining traction and could be the seed for some future form of fiscal solidarity in Europe. Such an arrangement is seen by many as fundamental for the long-term survival of the euro.

EURUSD

Ricardo Evangelista – Senior Analyst, ActivTrades

GOLD

The spot price of gold managed to hold the support level at $1,725 and rebound to $1,750. Bullion was lifted by the decline of US stocks in conjunction with the slowdown of the greenback.

Investors’ demand for bullion remains very strong with the price now less than 1% from its recent peak, which was the highest in the last 7 ½ years.

Carlo Alberto De Casa – Chief analyst, ActivTrades

Daily Market analysis

OIL 

The oil price is slowing down after the recent rally which lifted the July expiry well above $30. Investors seem much more confident that the demand will slowly recover and the filled-up tanks were most likely an exceptional event. These elements helped drive the price higher although it is now modestly declining as we return to a more risk off scenario, while some investors are taking profits after recent gains.

Carlo Alberto De Casa – Chief analyst, ActivTrades

EUROPEAN SHARES 

European share markets remain mixed this Wednesday with the recent optimism proving hard to maintain for most investors. The uncertainty about holding riskier assets re-emerged after hopes of a quick vaccine were nipped in the bud by experts expressing scepticism about the results of Moderna’s vaccine trial.

Jerome Powell didn’t manage to reassure traders yesterday as although he said he will use all of the Fed’s weapons to sustain the US economy, investors mostly took it as a sign of distress and/or impotence. Further details may however be provided later today with the FOMC meeting minutes. Investors will also be focusing on today’s speech by Mark Carney, the governor of the Bank of England, as well as on the latest data on US Crude Oil Inventories that could increase volatility on mining and energy shares.

The IBEX-35 is the most shorted EU benchmark so far with prices trading below 6,550pts. The technical configuration isn’t reassuring as the market has registered lower highs and lows recently, which is exerting bearish pressure on the short to mid-term. The trend is likely to stay neutral as long as the supports at 6,800pts and 6,420pts remain unbroken while the DMI indicator doesn’t show any market directionality. However, a break-out of the 6,420pts level could trigger a clearer directional move down towards 6,100pts and then 5,800pts.

IBEX-35

Pierre Veyret– Technical analyst, ActivTrades

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Daily market commentary: The euro continues to strengthen against other currencies

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