A day after equity markets turned cautious, investor appetite was slightly bullish.
A lack of economic fundamentals has kept the markets flat. The coronavirus, however, is keeping investors on the edge with some fund managers claiming that market fears are overdone.
Fed Chair Powell gave his testimony to the US Congress, but it was broadly neutral.
French Economy to Expand 0.3% in Q1
The Bank of France forecast that the French economy will rise by 0.3% in the first three months of 2020. This comes after the GDP fell 0.1% in the fourth quarter of last year.
The report came following a monthly survey from the bank suggesting that the manufacturing confidence index was unchanged in January at 96.0.
EURUSD Rebounds Off Lower Support
The euro currency is on track to close bullish after a long spell of declines. Price action bounced off the support area near 1.0897. This comes despite the Stochastics oscillator staying well within the oversold levels.
However, divergence on the intraday charts could indicate a rebound to 1.0952.
UK Fourth-Quarter GDP Stays Flat
The latest quarterly GDP report from the UK showed that the economy logged a flat growth rate. For the three months ending December 2019, the gross domestic product was unchanged on the quarter.
This follows a 0.5% increase in the third quarter of 2019. The increase in the services and construction sector was offset by the declines in the manufacturing and auto industry.
GBPUSD Fails to Capitalize on Gains
The cable initially jumped on the GDP report, but later into the day, prices failed to build upon the momentum. As a result, GBPUSD briefly tested the price of 1.2960 before pulling back.
If this momentum continues, we expect a continuation to the downside. Alternatively, price action could remain steady just below the resistance area for a while.
Gold Turns Weaker After Powell’s Speech
Gold prices did not react much to Fed Powell’s speech. Giving his testimony to Congress, the Fed Chair said that the bank is closely monitoring the impact of coronavirus.
Elsewhere, on monetary policy, Powell struck a neutral chord. However, the precious metal started to dip closer into the late European trading session.
XAUUSD Reverses at Resistance
The precious metal, after failing to breakout off the resistance level at 1573 – 1568, is pushing lower. This could potentially confirm the downside correction.
But price action needs to close below the previous pivot lows of 1548.29 to confirm the downside. The next lower target is at 1534.14.