US President Donald Trump announced on Tuesday that China and the United States agreed, in principle, to the first phase of a deal.
Reports indicate that both sides are also looking at rolling back the tariffs. Investors cheered the news as the appetite for risk assets continued to grow. Both sides are yet to sign off on this first phase.
Euro Continues to Give Back Gains
The euro maintained its bearish retreat. The risk-on sentiment has pushed the USD higher. A lack of economic data from the eurozone also saw investors trading based on the global risk-off narrative.
The US ISM non-manufacturing PMI was above estimates, adding to the dollar’s strength. Non-manufacturing activity expanded to 54.7, beating estimates and the results of the previous month.
Can the EURUSD Bounce Back from Support?
The currency pair fell to the support level as expected earlier. The question is whether price will be able to bounce off this support area.
The support level of 1.1075 – 1.1062 remains key for the currency pair. A break down below this level will accelerate declines to the next lower support at 1.1005. To the upside, prices could remain range-bound if the support holds.
Oil Prices Rally as Trade War Cools
Crude oil prices gathered momentum, rising for the third consecutive daily session. The gains on Tuesday were over one percent. They came amid US and China trade talks progressing better than expected.
There is also optimism that OPEC could cut production to give prices a boost. However, OPEC also released a report which cut demand for crude oil, but investors brushed it aside.
WTI Crude Oil on Track to Test Resistance
The gains in oil prices come after the bounce from the support area of 54.71 – 54.42. Price action has posted strong gains and the current momentum will see oil prices reaching for 57.64 – 57.87 region.
With resistance likely to form at this level, there is a risk that oil prices could remain range-bound in the short term.
Gold Prices Retreat on Market Optimism
Investors continued to shun the safe-haven gold, returning to risky assets. The US and China trade wars remain one of the major themes pushing risk appetite higher.
Gold has been trading weaker and the recent gains failed to post any fresh highs. Moderately better than expected data from the US also kept the precious metal’s prices in check.
Will Gold Continue to Fall Further?
The current bearish momentum could see gold prices posting declines. The lower support area of 1462 remains the key support for now.
A retest of this level could, however, see prices stabilizing. But for this to happen, gold must close below the trend line convincingly. The daily chart shows the bearish formation which points to the declines for the moment.