Euro inclined by Italian politics; Gold and Oil remains under pressure

Euro inclined by Italian politics; Gold and Oil remains under pressure

Euro inclined by Italian political developments

The Euro opened higher on Monday easing off its six-month low, signaling that markets prefers Italy to remain without government than formation of an anti-establishment government.

Of course, the forthcoming direction in the Euro will be largely dictated by the forthcoming political developments. The Italian President Matarella having faced calls for his impeachment or early elections, will most probably carry a great deal of political chaos. Also, in Spain the political situation is somehow unstable.

In addition to those European political concerns, recent economic also weighed on the euro. Decreasing inflation and slower growth has put the euro under selling pressure. The German PMI posted its lowest reading in 20 months last week, signaling a slowdown in the euro zone’s largest economy. The ECB expressed similar concerns at its recent meeting, all of which are discouraging signs.

From the technical view, there is a resistance zone at 1.1750 and 1.1800 and we are expected to see the Euro stabilizing at these levels and returning back to the downside awaiting new developments.

Gold remains under pressure

The Dollar is consolidating near its six-month high and limiting by that the gold and commodities’ recovery.

The safe haven had been battered by the latest improvement in risk appetite, amid talks that the US-North Korea summit will most likely take place next month.

Gold is testing a very important resistance area at current levels and sustained selling pressure at these levels will pave the way for further declines towards $ 1265.

Oil broken below the 67.00 barrier

Oil prices continued their tumble and posted a fresh one and a half month-low amid hints that Russia and Saudi Arabia will increase production as an attempt to offset any declines in output from Venezuela and Iran.

Although the parties are discussing an increase in production of about 1 million barrels per day, which is a very small amount, sentiments are driving the markets and not the actual figures. To continue the previous rise, oil prices needs new motives because all the recent motives have become totally priced. Of course, the supply cuts agreement was the main reason behind the last surge in oil prices. Therefore, hints that the supply cuts may be slowly phased out after next month’s OPEC meeting, or a probable increase in production will immediately weigh on prices. Especially as the US production continues to rise and the global demand for oil is threatened to fall due to rising prices.

From the technical view, the overall trend remains bullish and will remain so over the long term, but breaking the support barrier at $67.00 is seen as a negative sign and will lead the way for further declines towards $65.20, and the possibility of a return to new highs has become highly unlikely in the coming period.