After extensive speculation, the US and China have finally agreed on the much-talked-about phase one trade deal.
The announcement comes just before a fresh round of tariffs were to come into effect on goods imported from China.
Washington said that, while the 25% tariff will remain, it would cut the 15% levies by half. Investors expect further details over the coming weeks.
Euro Gives Back Gains Amid a Busy Day
The euro was trading stronger on Friday but gave back the gains by closing hours. The euro was buoyed by the outcome of the UK elections.
News about the trade deal also saw a bit of volatility for the US dollar. However, the euro ignored the weak retail sales report, trading off the global cues.
EURUSD Reverses Gains Off Resistance
The common currency rose to the resistance level of the 1.1200 – 1.1180 region. But price action quickly reversed, pushing EURUSD to close slight in the red. Currently, we expect the currency pair to slip to the lower support area of 1.1100. A retest of this level for support will likely keep the upside bias alive.
Sterling Gains on Tory Win
The pound sterling rose over 1.26% on Friday as the UK election results were announced. Investors had already bet on a Tory win. However, there was a bit of doubt on whether the Conservative party could win with a majority.
Following the results, PM Boris Johnson is now expected to proceed with his Brexit plans.
GBPUSD Retreats off 1.35 Level
With trades already pricing in a Tory victory, the currency pair reversed gains after reaching for 1.3500. Price action culminated with a strong pullback thereafter.
However, the upside bias remains in place for the moment. Short term support could form at 1.3226 level. But the currency pair could continue trading within Friday’s range.
Gold Pares Losses on US Data
The precious metal came under pressure following a host of positive news reports on the trade front and the UK elections. Amid the noise, economic data from the US saw that retail sales rose less than expected.
But the USD managed to brush aside the data. Gold prices, for their part, managed to hold ground.
XAUUSD to Remain Directionless in the Medium Term
The precious metal is trading within the established corridor of 1483 and 1462. As long as this range is maintained, we do not expect to see any major moving coming along. The bias also remains mixed for gold at this point. There is a risk of a breakout in either direction, especially with the weekly candlestick closing bullish.