The US dollar index closed last week on a bearish note. It was the first in three weeks. The weakness in the USD came despite President Trump ruling out intentions to weaken the currency. Trade wars remain in the forefront of the markets. US producer prices data showed a 0.1% decline on the core while rising 0.2% on the headline.
Sterling Slips to Multi-Year Lows
The UK’s economy fell into contraction unexpectedly in the second quarter of 2019. The declines come on the back of the country’s uncertainty on its departure from the EU in October of this year. The UK’s second quarter GDP was down 0.2% on the quarter, against estimates of a flat print. Businesses held back on investment in the face of Brexit uncertainty. The contraction in the second quarter was the worst since 2012.
Will GBPUSD Continue to Fall?
The currency pair fell to a fresh two-year low by Friday’s close. The declines saw GBPUSD testing the previously established support area of 1.2082. A rebound off this multi-year support level could be possible. Price action is also pending a retest of the breached support level at 1.2511. A retest of this level to establish resistance is likely. But this will depend on whether the currency pair can hold off the declines from current lows.
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Crude Oil Rises in Anticipation of Rumors
Crude oil prices rose on Friday, brushing aside a gloomy demand outlook by the US Energy Information Administration. Oil prices spiked after reports emerged that Saudi Arabia approached other OPEC members. The move comes as oil prices have been declining over the past month. Talks of OPEC devising a strategy to stem the oil price slide helped to push oil higher on the day.
Crude Oil Back at Resistance
Crude oil prices managed to post a strong reversal after slipping to the 52.00 level of support as anticipated. The current gains pushed oil prices to retest the 57.50 level. Establishing resistance here will now keep price action trading flat within the said levels. The Stochastics oscillator is currently pointing to a hidden bearish divergence, which will see a potential move lower.
Gold Holds Steady, Closing an Uncertain Week
The precious metal closed another week, with solid gains as the precious metal settled near fresh six-year highs, testing 1500 an ounce. The gains in gold came on the back of renewed trade issues. While equities attempted to recover, they closed on a softer note. The rally in gold depicts investor sentiment rushing to safe-haven assets.
XAUUSD Forming a Topping Pattern
The precious metal is seen consolidating near the highs at the 1500 level. The recent dip and a rally back to this level confirm the view of consolidation. Failure to post higher highs could see gold trading flat. The minor resistance is formed at 1494.80. A break down of this level will confirm a correction that is due. The lower support is in the 1431-1428 region. To the upside, a rebound off the 1494.80 minor support needs to be followed up by higher highs.