The New Zealand dollar traded 1.5% lower today after the overnight session showed that the RBNZ was likely to cut interest rates in the near term. The central bank left the official cash rate unchanged at 1.75% at today’s meeting.
Meanwhile, the market sentiment improved on Tuesday after the Treasuries gave back the gains easing fears of a recession. Chicago Fed member Evans, an FOMC voting member, said that the Fed is unlikely to cut rates until the second half of 2020.
Euro Trades Weaker on Mixed Data
The euro was down 0.38% on the day despite economic data from the eurozone staying sparse. The Gfk consumer climate report from Germany showed a decline to 10.4 from 10.7 previously. The fourth quarter GDP report from France was revised to show a 1.0% increase compared to a 0.9% increase as previously reported.
Will the EUR/USD Maintain the Bearish Momentum?
The EUR/USD currency pair continued to reverse the gains with prices posting a steady decline and resuming the bearish trend. The euro has traded near lows of 1.1251 levels at the time of writing which marks a support area. As long as the support holds, we could expect the EUR/USD to post a modest bounce to the upside.
Yen Extends Losses Despite Weak US Data
The Japanese yen eased back as the currency fell 0.59% on Tuesday. The reversal came as the USD regained the bullish momentum despite a mixed economic outlook. Housing starts grew 1.16M on the month coming out less than expected while the conference board’s consumer confidence surprisingly fell to 124.1 from 131.4 previously.
USD/JPY Bullish at Support, Can the USD Maintain Gains?
The currency pair posted a strong bullish candlestick just after prices touched down to the support level at 109.84. The strong close indicates prices are likely to drift higher in the near term. Watch the resistance level at 111.40 in the near term which could be tested, following the break of the trend line.
Gold Declines As Risk Sentiment Improves
Gold prices lost 0.46% on the day on Tuesday erasing most of the gains made from the day before. Price action, however, remains a bit volatile. The declines came as the market sentiment was seen showing a modest improvement following the initial panic after fears of a recession saw investors fleeing to safe haven assets.
XAU/USD Reverses at Resistance as Expected, so What’s Next?
Gold prices reversed direction after hitting the resistance level of the 1320 – 1321 region. The declines saw prices posting a modest rebound off the lows marking a lower high as a result. The local low formed at 1318.86 needs to be breached in order for gold to continue the declines lower. The support level at 1306 remains the next main target to the downside.
