The International Monetary Fund (IMF) cut its global growth outlook once again. For the year 2019, growth is forecast to rise by 3.3% compared to 3.5% previously.
The IMF cited several downside risks including Brexit, US-China trade talks and the US, Mexico and Canada trade agreement. Euro area growth was slashed to 1.3% while US growth was cut to 2.3% for the year.
Euro Waits for ECB Meeting
The euro was trading flat after briefly rising to a nine-day high on Tuesday. President Trump threatened the EU with an $11 billion tariff due to subsidies given to the European airline manufacturer, Airbus. The euro was initially unmoved on the reports but later settled the day flat.
Will the EURUSD Fall?
The currency pair extended declines after it rallied to intraday highs of 1.1276. The current declines will see price retesting the previous resistance level at 1.1245 to form support. If this holds, we expect a rebound which could eventually break 1.1276 to test the 1.1300 region. But a failure at the expected support could push EURUSD closer to 1.1245 and possibly extend further declines.
Crude Oil Slips on Mixed Sentiment
Oil prices maintained the bullish trend but eased after touching new highs of $64.68. Price retreated after conflicting signals. Russia, the largest non-OPEC supplier said on Tuesday that it prefers to increase supply when the current production cuts end in June. This was in contrast to the production cuts currently underway alongside tensions in Libya which have caused oil prices to maintain a steady uptrend.
Is WTI Crude Oil Due for a Correction?
WTI Crude oil has been rallying for the past five consecutive weeks pushing oil prices to a five-month high. The uptrend is still intact, and we expect this current dip to be a mere correction to the uptrend. The main target for crude oil prices is near the $65.00 – $66.00 region. The current dip is likely to see price testing $62.80 where support could be formed.
Gold Eyes ECB Meeting and Fed Minutes
The precious metal managed to post gains for the second daily session as price settled at $1303.92 by Tuesday’s close. The market sentiment helped to push the price of the precious metal higher. With the ECB due to take center stage today, followed by the Fed meeting minutes, gold could remain in a holding pattern in the near term.
Is There More Room for XAUUSD to Rally?
Price action in XAUUSD currently shows that price has settled within the 1307 – 1301 level of resistance as noted few days ago. We expect price to remain flat within this level. However, the risks are balanced as there is scope for gold to breakout higher which could see price attempting to test 1320. To the downside, the support at 1287 – 1284 will be the level to watch.