The US dollar continued its descent as the index fell for three consecutive days. The declines came about amid the quadruple witching on Friday leading to some outflows in the USD.
Economic data was mixed on the day as existing home sales rose 5.34 million beating estimates. However, Markit’s flash manufacturing and services PMI came out weaker than expected for June.
Euro Rises to 3-Month High
The common currency gained 0.67% on the day on Friday to close at a 3-month high. The gains in the euro were led by a factor of weaker USD and somewhat better than expected regional flash PMI’s. For the eurozone, the combined PMI reading was disappointing. Manufacturing PMI fell to 47.0 while services PMI rose to 53.4. ECB President Draghi was heard informing EU officials about the weakening growth in the eurozone.
Can EURUSD Maintain the Gains?
With the common currency trading flat, for the most part, this year, the recent close above $1.1300 is critical. A continued momentum to the upside could see the euro rising to $1.1400 as the next level. However, there is scope for prices to pull back in the short term. Temporary support is seen near the 1.1339 level which could see price falling back to establish support more firmly. This will eventually signal a reversal that could keep EURUSD on track to test the $1.1400 handle eventually.
WTI Settles Near 3-week High
Crude oil prices maintained the momentum into Friday’s close as price settled near a 3-week high. Price action remained biased to the upside, but the pace of gains was limited compared to the previous days. This came as President Trump was close to ordering an attack on Iran but refrained at the last minute. Investors expect to see diplomacy take the front-seat, adding to easing pressures. Over the weekend, Trump announced fresh sanctions on Iran.
Oil Prices Could Correct in Near Term
Following the rally to the identified resistance level of 57.50, crude oil prices closed with a spinning top pattern on Friday. A bearish follow-through is required today in order to confirm the short-term downside. The lower support is found at 54.24 which could be tested in the near term. A rebound off the 54.24 level could pave the way for oil prices to break past the 57.5 resistance level and aim for the $60 handle.
Gold Rallies to 6-Year High
The precious metal continued its bullish trend, as it closed Friday with 5 consecutive weeks of gains. Gold prices briefly tested highs of $1400 an ounce before retreating back to settle at $1399.29. The gains come as most of the central banks shift to a dovish bias alongside some global uncertainty on trade.
Will Gold Pull Back from the Current Highs?
The XAUUSD could see some form of a pullback in the near term, especially after testing the 1400 level. The immediate lower support is seen at the 1354 handle. Establishing support at this level could keep the bias to the upside. However, following the pullback, gold will need to break past the current highs above 1400 to keep the gains coming. To the downside, a close below 1354 could send gold lower to the 1320 support.