Equities fell and safe havens made gains on Tuesday. In the backdrop, the US and China are set to resume the trade talks today.
However, moves from Washington suggest that the US will go ahead with restricting investments in China. This could potentially become a talking point as the trade talks resume.
China said that it strongly opposes the decision to blacklist some of the tech firms in China.
German Industrial Output Rebounds
Germany’s industrial output data for August surprised, rising 0.3% on the month. The data soothed concerns about a possible recession in the eurozone’s largest economy.
The increase also beat the estimates of a 0.2% increase from economists. Industrial production grew by 0.7%, while energy production fell 1.7%. Construction output was down 1.5% during the month.
Can the EURUSD Rebound?
The common currency slipped largely due to the strength in the US dollar. Price action indicates that the pair is testing the support area of 1.0944.
A firm test of this support level could confirm the upside bias. The resistance area of 1.1091 remains the key target moving forward. However, if the support fails, the currency pair could see extending declines back to last week’s lows.
Sterling Slips as Brexit Talks Breakdown
The pound sterling fell on Tuesday after reports showed fading optimism on the newly proposed Brexit deal. The EU snubbed PM Johnson after he said that German Chancellor Angela Merkel made it difficult to strike a deal.
The move now potentially paves way for another possible extension to the October 31st deadline. Speculation is also rife that the UK could head for a snap election.
Can the GBPUSD Extend Declines Further?
The currency pair was largely trading flat into the start of this week. But Tuesday’s Brexit developments put further downside pressure. GBPUSD eventually broke to the downside from the range.
The currency pair is testing last week’s lows of 1.2203. Further declines are possible on a move lower. The next downside target is at 1.2082.
Oil Prices Slip as US-China Trade Talks Resume
Oil prices fell on Tuesday ahead of the US and China trade talks. The outlook remains grim for oil prices amid subdued demand.
Global growth is expected to slow which could put a lid on oil prices in the near term. Meanwhile, oil traders await the weekly crude oil inventory report. Oil inventories have been posting a build up over the past few weeks.
Will Oil Prices Continue to Fall?
WTI crude oil is testing the familiar support area of 51.70. The 4-hour Stochastics oscillator is pointing to a potential bullish divergence.
If there is a rebound, crude oil prices must rise above 53.55 to confirm the upside. The next main target will be the 57.50 level. Price action could rally to this level to reconfirm resistance.