Two Trades To Watch: EUR/GBP, Gold - Wednesday, June 30

EUR/GBP tests 0.86 after UK GDP Q1 downward revision & ahead of Eurozone data. England may be going for Gold but that hasn't helped the precious metal which trades at 2 month lows ahead of ADP data.

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EUR/GBP tests 0.86 after downward revision to UK GDP Q1

The Euro failed to capitalize on stronger than expected consumer confidence data on Tuesday.

Eurozone economic sentiment surged to a 21 year high in June as the economy reopened. 

UK GDP Q1 final print came in at -1.6% quarter on quarter, down from -1.5% previously recorded. 

The UK government announced changes to the state aid program following Brexit. The aim is to make it easier and less bureaucratic for companies to access aid. 

UK covid cases are rising sharply but deaths remain low and the UK is still on track to reopen on 19th July, supporting the Pound 

Looking ahead a slew of Eurozone data is expected including German unemployment and Eurozone CPI (EZU). 

Where next for EUR/GBP? 

The EUR/GBP tests resistance at its month old trendline and 200 sma on the 4 hour chart at 0.86 which has capped gains in recent sessions. 

The MACD appears to be forming a bearish crossover providing hope to sellers that the pull back from 0.86 could continue towards 0.8585 the week old ascending trendline support.  

A break below this support could see the sellers test 0.8575 the 50 sma on the way to 0.8525 the June 24 low and 0.85 the round number. 

Any recovery would need to retake 0.86 round number, 200 sma and trendline resistance which could prove a tough nut to crack. A break here and above 0.8610 yesterday’s high, could open the door to 0.8630 June 15 high and 0.8665 the June high (FXE, FXB).  

England might be going for Gold but that hasn’t helped the precious metal 

Gold is falling lower for a third straight session. The precious metal trades 1.2% lower so far this week, thanks in part for the stronger US Dollar.  

Federal Reserve Governor Christopher Waller’s hawkish comments also dragged on non-yielding gold. He said “It’s appropriate to start thinking about pulling back on some of the stimulus”. 

All eyes will turn to the US ADP figures. A stronger than forecast reading could add pressure to the Fed to hike rates, which could drag Gold lower. A softer number could work in Gold’s favour, easing pressure on the Fed to tighten policy. 

Where next for Gold prices? 

Gold trades under pressure, below its 3 week old descending trendline and below its 50 & 100 sma on the 4 hour chart. 

The RSI is in bearish territory, supportive of further losses whilst it remains out of oversold territory. 

Immediate support can be seen at 1750. A close below here could see the precious metal target 1730 low April 14. 

Any recovery would need to retake 1865 the descending trendline resistance ahead of 1775 the 50 sma. A move above this level could negate the near-term bearish trend. A break above 1790 could see the buyers gain traction towards 1800 key psychological level (GLD). 

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