The US dollar was seen posting some moderate gains on Tuesday. This marks the first bullish close since the previous four consecutive bearish declines. The G20 summit is due to start over the week where President Trump and China’s Xi are due to meet.

Global yields continued to fall. St. Louis Fed Chair, Bullard hinted at a 25bps rate cut at the July meeting. The RBNZ held its monetary policy meeting in the overnight session and left the official cash rate unchanged at 1.50%. However, the RBNZ hinted at more rate cuts over the course of the next few months.

Euro Losses at 1.1400 Handle

The common currency was bearish on Tuesday just after the rally pushed the currency to the 1.1400 handle. The declines come amid any major economic news out of the Eurozone. Italy’s deficit continues to remain one of the prevailing narratives. However, the declines in the euro came due to a stronger greenback which is on track to post the second day of consecutive gains. On the economic front, Germany’s GfK consumer confidence report is due to come out later today.

Will the EUR/USD Retrace Lower?

The reversal off the 1.1400 handle comes on a potential profit taking. The currency pair has extended strong declines since hitting this level. The short term support is found at 1.1339. If EUR/USD fails to rebound at this support, we expect to see a sharper correction. This will pull the euro lower to the 1.1250 level. To the upside, the currency pair could remain range bound within 1.1400 and 1.1339.

Crude Oil Rises on Inventory Drawdown

WTI crude oil prices broke past the sideways range established over the past two days. WTI crude oil closed at $58.72 on Tuesday. The gains came after the weekly inventory report from the American Petroleum Institute (API) showed a larger than anticipated drawdown in stockpiles. API’s weekly inventory saw crude oil stockpiles reporting a drawdown of 7.55 million barrels for the week ending June 20^th. This was well above the median estimates of 2.89 million barrels in drawdown.

Will Crude Oil Prices Rise Further?

The current bullish breakout after the Doji candlesticks since the past two days indicate further gains. With price clearing the resistance area of 57.50, further gains are expected. The next main upside resistance is seen at the 61.00 level. We, therefore, expect oil prices to continue to rise to this level in the near term. To the downside, the bias shifts if oil prices fall back below 57.50. This will open the way for a retest to the 54.00 level of support.

Gold Slips as Fed Stresses on Central Bank Independence

Gold prices were seen trending lower this morning after price rallied to a fresh six-year intraday high of 1439. Fed Chair Jerome Powell stressed the independence of the central bank in a speech on Tuesday. Powell also warned about the risks of monetary policy caving into political interests. Powell, however, did not tip his hand into what the Fed would do at the next meeting. The odds for a July rate cut have been increasing since the last Fed meeting.

How Far Will Gold Prices Correct?

The strong gains in gold prices over the past few weeks has led to the precious metal appreciating over 10% in just four weeks. However, the early correction seen this morning has pushed price to the short term support of 1404.33. A rebound off this level could keep prices supported to the upside. However, gold will need to break past the previous highs above 1439 to confirm the bullish trend continuation.