Euro weakens as investors assess German elections

Despite attempting to fill the gap at the open, the euro currency was seen turning bearish. Investors digested the German elections outcome which turned out as expected. However, with the AfD making inroads into the Bundestag, the markets were a bit cautious. The rise of the populist and right leaning political parties this year has been a major concern among the leaders in the EU.

Politics was the main theme on Monday with the New Zealand election results expected to be announced over the week. In Japan, PM Abe called for snap elections in a bid to consolidate his position amid threats from North Korea. Speaking in a televised speech on Monday, Abe said the elections would be a verdict of his performance in handling the spending plans and also his handling of the North Korea crisis. Abe also said that he would resign as the prime minister if his party failed to win a majority.

Looking ahead, the economic calendar is light today which makes the Fed Chair Janet Yellen's speech the main event of the day. Ms. Yellen will be speaking at an event in Cleveland.

EURUSD intraday analysis

EURUSD (1.1857): The EURUSD turned bearish, but the price action continues to remain range bound within 1.2080 and 1.1822 levels of support and resistance. This sideways price action could potentially signal to a breakout in the near to medium term. On the 4-hour chart, however, there are some bearish signs with the descending triangle formation. Support is seen at 1.1843 - 1.1822 level. A breakout below this level could signal further declines that could send the common currency towards the support level at 1.1688 which is pending retest.

GBPUSD intradayanalysis

GBPUSD (1.3483): The British pound also continues with its consolidation with price action briefly slipping below 1.3488 support. Th re-adjusted bullish flag pattern remains in play although price will need to breakout from this bullish pattern to signal continuation. Continued consolidation within 1.3558 - 1.3488 could potentially weaken the bullish chart pattern and increase the risk of a downside breakout. A daily close below 1.3441 could validate this bearish bias as GBPUSD could be seen pushing lower towards 1.3236.

XAUUSD intraday analysis

XAUUSD (1310.74): Gold prices rebounded strongly in the day yesterday as price action closed above the support zone of 1300.86 yesterday. We expect this continuation to push prices higher in the near term. Gold prices will need to test the resistance level at 1324.72 - 1320.39 region. A reversal here could push gold prices back lower to the support level. A rebound off this level could keep the bullish bias intact as gold prices could eventually break past 1324.72 and target the next main level at 1345.87.