Euro Steady Ahead of ECB Meeting, Gold on Standby

Investors should not be quick to label this meeting a non-event given the domestic and external headwinds weighing on the Eurozone economy. The terrible combination of tepid inflation, drama over Italy’s budget and Brexit among many other risks remain a headache for ECB policy makers. Investors will be paying very close attention to the economic forecasts which should provide some fresh insight into the health of the nation. Should the central bank downgrade growth projections for 2020, this will most likely negatively impact the Euro.

In regards to the technical picture, the EURUSD remains under pressure on the weekly charts. A breakdown below 1.1200 is likely to open a path back towards 1.1100 and 1.1000, respectively.

Currency spotlight – GBPUSD

The fact that the Pound extended losses against the Dollar this morning confirms how the rebound witnessed yesterday was the product of Dollar weakness. Buying sentiment towards the Pound is likely to remain depressed thanks to Brexit uncertainty and political risk in the UK.

Taking a look at the technical picture, the trend still points south on the daily charts with bears in the driver’s seat below 1.2800. A breakdown below 1.2700 is likely to encourage another move back down towards 1.2620.

Commodity spotlight – Gold

Gold appears to be one of the few positive talking points across financial markets amid a tornado of geopolitical risks, ongoing trade developments and global growth fears.

The precious metal stormed into June extending gains seen in May and blasted above the psychological $1300 level thanks to rising risk aversion. Persistent fears over US-China trade tensions negatively impacting global growth, depressed equity markets, Brexit and political risk in Europe supported the flight to safety consequently elevating Gold. A weaker Dollar amid growing concerns over trade disputes threatening US economic growth also played a leading role in the metal’s resurgence. With the overall mood across financial markets likely to remain negative as investors adopt a guarded approach towards risk, this is certainly good news for Gold and other safe-haven assets.

Market speculation over the Federal Reserve cutting interest rates amid trade tensions, a weaker Dollar and geopolitical risks should ensure Gold remains buoyed moving forward. With the yellow metal already trading above $1330, the next key level of interest may be found around $1349.

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