The USD traded higher on Tuesday, rising to a six-week high. The new home sales report showed a 4.5% increase on a month over month basis, beating estimates of 645,000. New home sales rose to 692,000 in March. February’s figures were also revised higher to show 662,000 units being sold. The markets await the durable goods orders and Friday’s GDP report.
Euro Slips to a 3-Week Low
The common currency extended declines on Tuesday, losing 0.3%. The eurozone’s consumer confidence report released during the day saw the index falling to -7.9. This was below the estimates of -7.0. Economic data was sparse over the day. The ECB will be releasing its economic bulletin later today.
Can the EUR/USD Fall Further?
The EUR/USD currency pair fell to a three-week low, briefly slipping below 1.1200 handle. Price managed to recover off the lows, but the overall bias remains to the downside. With the support level of 1.1217 being breached, further downside is expected. The next lower support at 1.1174 could stall the declines temporarily.
WTI Crude oil continued to maintain a steady gain as prices rose to fresh yearly highs. Oil prices briefly tested a six-month high of 66.53 before pulling back by the closing session. Uncertainty about supply shortages continues in the oil markets. The onus now falls upon OPEC and Russia to plug the supply-shortage from Iran. However, it is unlikely that Saudi Arabia will act alone in raising production.
Will Crude Oil Rise Further?
Following the strong gains over the past two days, oil prices were seen pulling back from the highs. Price is trading within the resistance area of the 65 – 66 handle. As long we do not see a weekly close above this level, oil prices could consolidate near the highs. Since the rally has been rather strong, there hasn’t been any pullback so far. Therefore, oil prices could post a correction in the near term. The initial support is seen at 64.55.
Gold Prices Fall as Risk Appetite Gains
The precious metal resumed the declines on Tuesday amid an improving risk appetite in the markets. Gold prices eased to a four-month low as the USD bounced back and the equity markets closed near record highs. Spot gold fell 0.1% on the day to hit the lowest levels of $1266 before pulling back.
What’s Next for XAU/USD?
With the precious metal failing to capitalize earlier on its consolidation above 1273, the declines mark further downside. The 200-day EMA has failed to keep a floor on the declines leading to the intraday losses. The next main target for XAU/USD comes in at the 1240 – 1250 handle. This level is very likely to provide support to the downtrend. In the near term, any rebound in prices could still see a move to the 1285 support which can be tested for resistance.
