ECB President Mario Draghi, speaking to EU lawmakers reiterated that the central bank was ready to cut rates even more. Draghi warned that the downturn in the manufacturing sector could spill over to other parts of the economy. Draghi’s comments come after the ECB lowered the deposit rate at its recent monetary policy meeting. The central bank also restarted its QE program in a bid to revive the economy.
Bundesbank Downplays Recession Fears
The Bundesbank said on Monday that the German economy entered into a recession in the three months through September. However, the central bank dismissed it by saying that there was no cause for concern. The comments came after German flash manufacturing PMI hit the lowest level in over a decade. Markit’s flash PMI for Germany fell to 41.4, down from 43.5 in August. Meanwhile, the GDP fell 0.1% in the three months to June 2019.
EURUSD Gaps Lower, but Supported by Trend Line
The currency pair gapped lower on Monday’s open, but price managed to fill the gap intraday. Currently, EURUSD remains supported by the long-term trend line. But there is scope for the currency to break down even lower. The support area at 1.0950 and 1.09260 will come into the picture once again. For now, there isn’t much of a change in EURUSD’s technical chart.
Boris Johnson Pushes for Final Bid on Brexit
The British Prime Minister is making a bid for the Brexit deal. Boris Johnson is in the US on the sidelines of the UN general assembly. Johnson will be speaking a number of his counterparts including Germany and the EU Council President Donald Tusk. Meanwhile back home, Jeremy Corbyn’s Labor party will be taking a vote on whether to back the idea of the UK staying in the EU.
GBPUSD to Maintain Bearish Momentum
The GBPUSD currency pair continues to extend declines. This comes after price action broke out to the downside from the ascending wedge pattern. The near-term support area of 1.2370. Any upside gains will be capped near the resistance area of 1.2511.
Gold Advances Amid Modest Risk Aversion
The precious metal advanced for the second consecutive day. This was followed from Friday’s bullish price action. Market sentiment remains cautious amid the U.S. and China trade talks not making much progress. Concerns about the global economy and Brexit remain the key headwinds in the near term.
XAUUSD Tests Three-Week High
The currency pair broke out from the sideways range and continued to maintain the upside bias. As a result, the precious metal rose to a three-week high. However, XAUUSD retreated from the intraday highs. Price action is likely to test the upside breakout level of 1508.00 to establish support.