- Dollar drops against most majors as gold hits 7.5-year highs.
- German minister calls for a temporary ban on Chinese takeovers.
- Escalation of the US-China or EU-China tensions could cap the upside in EUR/USD.
Gold's rally to multi-year highs is likely weighing over the US dollar and pushing the EUR/USD higher on Monday.
The currency pair is currently trading at 1.0823, representing a 0.10% gains on the day, having put in a low of 1.0807 during the Asian trading hours.
Meanwhile, Gold is trading at $1,760, the highest level since November 2018, and is reporting nearly 4% gains from the low of $1,693 observed on May 12. Notably, the yellow metal is flashing green for the fifth straight day.
The metal seems to be drawing bids, possibly in response to the escalating tensions between the US and China on the coronavirus outbreak. Further, Federal Reserve's President Powell said over the weekend that the US economy may need more support from both the central bank and Congress.
The sustained uptick in gold, a hard currency with limited supply, looks to be fueling broad-based losses in the dollar. For instance, growth-linked currencies like the AUD and NZD are reporting 0.4% gains against the US dollar.
Looking ahead, the upside in EUR/USD could stall if China objects to the German minister's appeal to the European Union to block Chinese takeovers of companies.
"We have to see that Chinese companies, partly with the support of state funds, are increasingly trying to buy up European companies that are cheap to acquire or that got into economic difficulties due to the coronavirus crisis," said Manfred Weber, a senior German conservative and head of the center-right EPP grouping in the EU Parliament, according to Reuters.
Moreover, the US-China trade tensions are already on the rise and could weigh on risk assets. On the data front, German Bundesbank's Monthly Report is scheduled for release on Monday. Across the pond, the focus will be on the NHB Housing Market Index (May).
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.