The EURUSD edged lower on Monday with prices sinking towards 1.2440 ahead of Mario Draghi’s testimony before the European Parliament, in Strasbourg.
With the bullish sentiment towards the Euro boosting investor appetite for the Euro and the Dollar still somewhat pressured by political uncertainty in Washington, the EURUSD remains heavily supported. Euro bulls are likely to receive further inspiration to propel prices higher if Draghi adopts a more hawkish tone this afternoon. From a technical standpoint, the EURUSD remains firmly bullish on the daily charts. Prices are trading above the daily 50 SMI while the MACD trades to the upside. A decisive breakout and daily closer above 1.2500 could encourage a further incline higher towards 1.2650. Alternatively, sustained weakness below the 1.2500 resistance level may invite a decline towards the 1.2350 higher low.
Sterling tumbles after disappointing UK data
Sterling found itself under renewed selling pressure during Monday’s trading session after weaker than expected data from Britain’s services industry sparked concerns over the health of the UK economy.
The UK’s services PMI reading fell to 53.00 in January, marking its slowest pace of growth in sixteen months. This disappointing report has dealt another blow to buying sentiment and is likely to weigh heavily on the pound moving forward. Taking a look at the technical picture, the GBPUSD has found itself out of luck with prices sinking towards 1.4000 as of writing. A daily close below 1.4000 could encourage a decline lower towards 1.3850. A move back above 1.4140 may be needed for bulls to jump back into the game to reclaim 1.4230.
Commodity spotlight – Gold
Gold was heavily depressed on Friday following January’s solid U.S jobs data.
The U.S economy created 200,000 new jobs in January, while yearly wage growth hit an eight and a half year high. With the positive jobs data boosting expectations of higher U.S interest rates, Gold, which is zero-yielding, was exposed to downside losses. Although the yellow metal has clawed back some losses during trading on Monday, bulls need to break above $1340 to pave a path for further upside.
From a technical standpoint, Gold remains at risk of depreciating further, if the Dollar continues to appreciate. Sustained weakness below $1340 could encourage a decline back towards the $1333 higher low. Alternatively, a situation where bulls are able to break above $1340 could trigger an incline towards $1360.
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