Equity markets broke fresh ground on Thursday. Reports indicate that Washington is ready to cut the existing tariffs by half on over $360 billion goods.
There is also speculation that the US will cancel the new tariffs due to kick in from December 15th. The news comes just when doubts began to rise on whether both parties would reach a deal before the December 15th deadline.
Euro Trades Weak After ECB Inaction
The ECB held interest rates steady and did not make any major changes to its forward guidance.
EUR/USD Retreats Off Resistance
The euro hit the resistance price level of the 1.1131 region. Failure to post a convincing breakout above this level saw prices retreating. With resistance established at this level, we expect the common currency to decline in the near term.
The first support level at 1.1100 remains key. A breakdown below this level will signal further losses that could push the euro down to the 1.1072 level.
Crude Oil Prices Hold Steady
Oil prices have held onto the gains from earlier in the week. The weekly inventory report out on Wednesday gave a brief boost.
Commercial stockpiles rose only 800,000 comparing to the expectations of a draw. Combined with the production cuts announced at the recent OPEC meetings and trade optimism, oil prices are maintaining the bullish momentum.
WTI Crude Oil Could Rise Further
WTI crude oil is trading within the rising price channel. This indicates further gains are likely to come. The next upside resistance is at 60.80. But ahead of the gains to this level, we expect to see some pullback. The lower support area at 57.87 – 57.64 could be tested in the short term. As long as this support holds, the upside bias remains.
Investors Shun Gold as Risk Sentiment Rises
Gold prices were down by over 0.4% on the day. The declines came largely because of trade deal optimism.
Gold prices have been caught trading within the range over the past month. While prices got a boost from the dovish Fed outlook, the gains were reversed quickly.
XAU/USD Likely to Maintain the Sideways Range
The precious metal is expected to continue trading flat. The established range of 1483 – 1462 remains for the moment. Unless gold breaks off from this range, we do not expect prices to head anywhere.
The bias remains to the downside, for now. This will especially come if the US and China reach a conclusive trade agreement.
This market forecast is for general information only. It is not an investment advice or a solution to buy or sell securities.
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