The US dollar starts the trading week with a bearish tone as the EUR/USD regains the 1.22 level. Crude oil recovers and precious metals look strong.
The trading week starts with the financial news dominated by the cryptocurrency market’s meltdown. Over the weekend, Bitcoin, Ethereum, and other coins lost over 10% of their value before recovering some of the lost ground.
The traditional currency market is trading more or less where it ended the previous week. The US dollar remains low, as reflected by the EUR/USD’s ability to regain the 1.22 level, after trading with a weak tone last Friday. Also, the AUD/USD and the GBP/USD showed similar price action.
Equities opened close to their recent highs in Europe, while the US futures point to modest gains. As such, the Spanish index opened about 0.17% higher, the FTSE100 about 05%, and the Dow Jones in the US by 0.42%.
On the commodities front, oil has had a strong bounce and is now up 1.46% to start the trading week. Despite more news coming out that an Iranian deal is just around the corner, investors are still willing to buy the dip on the back of a stronger economic recovery. Gold trades close to the $1,900 level, as precious metals remain in strong demand.
The day ahead is light in terms of economic events. Moreover, banks in Switzerland, France, and Germany, are closed due to a bank holiday. As such, the focus will be on the cryptocurrency market and the US session.
The Bank of England’s Governor Andrew Bailey is testifying today before the Treasury Select Committee in London, so British pound traders might want to keep an eye on the pound’s volatility surrounding the event.
Markets to Watch
Crude oil, GBP/USD, USD/CHF – markets in focus today.
The technical picture looks constructive. Crude oil was rejected twice from the $67 area, but it kept the series of higher lows on its attempt to push to the downside. As such, the chart indicates a possible ascending triangle, a continuation pattern that points to higher levels. The $67 area is key for further advancement.
The GB/USD pair formed a rising wedge pattern while attempting to break above 1.42. The 1.40 remains key, and the pair tends to keep a bullish bias while above. A move below 1.40 should however trigger more weakness in the medium to short term.
Another wedge, but this time a falling one, forms on the USD/CHF pair. The 0.90 level is critical here, and the pair remains under pressure while below. A move above should trigger more strength to the wedge’s full retracement in the 0.9150 area.
Winners and Losers
The US dollar looks weak, while the WTI crude oil price and gold look for new buyers to push up price.