Gold prices have been trending higher for the fifth day in a row on Tuesday
The safe-haven dollar continues to lose ground on Tuesday despite risk aversion reemerged across the financial markets. The USD index derailed the 102.00 handle for the first time in a month to notch fresh local lows around 101.75 earlier in the day. The dollar managed to trim intraday losses in recent trading as both the euro and the pound came off local highs. The USD index regained the 102.00 mark after a dip to one-month lows around 101.75 earlier in the day. As such, EURUSD rallied to monthly highs around 1.0735, retaining a mild bullish bias during the European hours while changing hands marginally above 1.0700. The next upside target now arrives at 1.0800. In a wider picture, however, the common currency remains within a bearish trend at this stage, albeit the technical picture has improved since recovery above the 20-DMA, today at 1.0530.
After a positive start to the day, the cable plunged abruptly during the early part of the European session on Tuesday after fresh data showed that the UK manufacturing and services PMIs dropped sharply in May. While markets had earlier priced in five more hikes for this year, expectations were down to four hikes after the release. As a result, the GBPUSD pair plunged from the 1.2600 zone to 1.2475, having erased yesterday’s gains before finding support represented by the 100-SMA on the hourly charts. The pair was last seen clinging to the lower end of the intraday range, shedding nearly 0.8% on the day. During the sell-off, the pound managed to hold above the 20-DMA that represents the immediate significant support in the near term. On the upside, the pair could revisit 1.2600 and even overcome this barrier should the greenback stay pressured during the week.
After some hesitation, USDJPY fell on Tuesday as the greenback remains on the defensive nearly across the market. The pair dipped to 127.08 and was last seen clinging to the lower end of the range, threatening the 127.00 mark. Should this level fail to withstand the pressure, traders will shift their focus towards the 126.30 zone last seen in mid-April. On the hourly timeframes, the buck stays below the 20-SMA, with the RSI keeps pointing lower, suggesting the path of least resistance remains to the downside for the time being. The near-term outlook remains downbeat as long as the pair stays below the 20-DMA, today at 129.20. Should the prices regain this moving average, the 130.00 mark will come back into the market focus. On the downside, failure to hold above the ascending 20-week SMA would imply that USDJPY has probably peaked already.
Gold prices have been trending higher for the fifth day in a row on Tuesday, albeit the upside momentum looks too modest to bet on more robust gains in the near term. The XAUUSD pair is now flirting with the 20-DMA, struggling below yesterday’s highs registered around $1,865. A daily close above the mentioned moving average, currently at $1,854, would help improve the near-term technical picture, but the overall bullish potential stays limited while below the $1,900 mark last seen earlier this month. On the four-hour timeframes, the yellow metal has settled above the 20- and 100-SMAs that converge around $1,849 while the RSI looks directionless around the 63 figure, painting a neutral-to-positive short-term technical picture. In the longer-term, XAUUSD could retarget the $2,000 mark if the dollar retreats dramatically in the coming weeks or months.