Risk Sentiment Rises as Trade Talks Progress
Risk sentiment rose in the markets amid news that the US-China trade talks were progressing faster than expected.
The news came after US Commerce Secretary Wilbur Ross said that American companies would be granted licenses to sell to products from the Chinese giant Huawei. Equities rose to fresh yearly highs on the news.
Euro Slips on Dollar Strength
The euro fell back on Monday as the US dollar index rose. The dollar index snapped a 5-day losing streak.
Economic data from the eurozone was sparse. Most of the trade flows for EURUSD came on the back of the dollar strength.
Final manufacturing PMI for the eurozone rose slightly from 45.7 to 45.9, beating estimates by a small margin.
Will EURUSD Continue to Post Declines?
The currency pair continues its retreat after failing to retest the resistance area of 1.1177. EURUSD initially failed to test this level.
The current declines could push the currency pair down towards the initial support at 1.1131. A breakdown below this level could hasten the decline to 1.1075.
UK Construction PMI Weaker than Expected
Construction PMI in the UK remained in contraction. Data from Markit for October saw construction activity falling to 44.2.
The data was slightly higher than the month before. The construction activity improvement comes following the manufacturing PMI which was slightly better than the previous month.
GBPUSD Likely to Remain Trading Flat
The currency pair briefly rallied to the resistance level of 1.2960 before retreating. The currency pair has started to decline, and the lower support at 1.2865 will most likely be tested.
The GBPUSD could remain trading within this range in the near term. However, the 4-hour Stochastics oscillator is in oversold levels which could see a modest rebound to the upside.
Gold Turns Bearish on Rising Risk Sentiment
The rising risk sentiment in the market sent the safe-haven assets lower, including gold. However, gold prices remain anchored near the lower highs that are forming.
The economic calendar for the week also remains bleak for the moment. Thus, most of the gains in gold prices will depend on the major trade flows on the US-China trade deal.
XAUUSD Likely to Post Declines in Near Term
The precious metal, after testing the resistance level at 1511.50 is retreating currently. However, price action will need to push lower in order to confirm the declines further.
The initial support at 1495 will be the first support of interest. A breakdown below this level will, however, confirm the decline to 1462 support.