The markets were trading mostly flat on the day on Tuesday thanks to a lack of economic data. Investors are now waiting for Fed Chair Jerome Powell’s testimony today.
Powell will be making prepared remarks later today. Following the somewhat better than expected payrolls report in June, investors are scaling back their bets for a rate cut. The Bank of Canada will also be holding its monetary policy meeting later today.
Euro Continues to Weaken
The common currency remained weak as it extended declines even further on Tuesday. Economic data from the eurozone was confined to Italy’s retail sales. Retail sales were down 0.7% on the month. Meanwhile, the election in Greece has brought out the populist right-wing party as the leader. The euro did not react much to the news.
EURUSD to Continue to Drift Lower
The currency pair has pushed lower since the start of the week. We expect the declines to eventually conclude lower to the 1.1188 level. If the support level here holds, there is scope for the EURUSD to rebound in the short term. But if price breaks past this level, the currency pair is likely to test the previous lows near 1.1140.
Crude Oil Gains on API Inventory
WTI Crude oil prices posted modest gains on Tuesday. The gains came on the back of the American Petroleum Institute’s weekly inventory report. API reported a drawdown of 8.129 million barrels for the week ending July 4th. This was a bigger than expected draw. WTI Crude oil prices jumped 1.35% on Tuesday.
Will Oil Prices Trend Higher?
As oil prices reclaimed the support/resistance area of 57.50, the bias is looking to the upside. The bearish flag pattern is starting to be invalidated on the evolving price action. The upside target is now back to the 60.00 handle that was previously tested. Oil prices will need to break past this level to continue maintaining the upside trend.
Gold Stays Muted as it Maintains Range
Gold prices were trading flat on the day, posting some modest gains. Price action was confined within the range of 1404 and 1383 for the most part of the week. A lack of clear economic data and a flat market sentiment kept the price of the precious metal unchanged.
Will Gold Continue to Trade Flat?
The current sideways price action has been maintained since late last week. With the range being formed, a breakout is evident. The bias remains balanced at the moment. An upside breakout could push gold prices higher, testing the previous highs. However, given the break of the rising trendline, there is scope for the lower end of the range at 1383 to be breached.