Market Analysis

New trends heavily in focus during the upcoming trading week

New trends have started to emerge in financial markets after the Federal Reserve paved-the-way for an interest rate cut in July last week, causing many asset classes to perform major technical breakouts. Gold moved to a five-year trading high last Thursday, while the U.S Dollar Index closed the trading week below its trend defining 200-day moving average for the first time since the spring of 2018.

The EUR/USD pair closed last week above its 200-day moving average for the first time this year, which was of course closely correlated with the performance of the U.S Dollar Index. If these major technical breakouts hold, it is likely that the U.S Dollar is now heading into a minor bear market, as traders foresee not just one interest rate cut, but a series of rate cuts from the Federal Reserve this year.

Gold has certainly been the star performer since Wednesday’s dovish FOMC policy statement and the heightening of tensions between Iran and the United States. The prospect of a weaker U.S Dollar and a flight into safe-haven assets in times of geopolitical uncertainty has created a perfect storm for gold bulls.

Equity markets also made a substantial move higher last week, with the Dow Jones on track for its best June performance since 1938. The S&P 500 also moved to a new all-time high, before slipping lower into the weekly price close. Stock markets cheered the news that the Federal Reserve will almost certainly be cutting rates next month, underscoring the powerful effect that the promise of cheap borrowing and central banks still have on financial markets.

Aside from foreign exchange, U.S equities and gold, Bitcoin easily broke above the $10,000 resistance level over the weekend for the first time since March 2018. Digital assets had a rough ride in the second half of 2018, many top coins, such as Bitcoin, now appear to be entering back into fully fledged bull markets. The announcement of Facebook’s new cryptocurrency, Libra, has only enhanced the fact that the digital currency market is almost definitely here to stay.


EUR/USD Daily Mountain Chart |Source: ActivTrader

EUR/USD Daily Mountain Chart |Source: ActivTrader


The trading action for the EUR/USD will be focused around its 200-day moving average this week, multiple daily price closes above this key area and the pair could catch a strong bid towards the 1.1500 level. Sustained weakness below the 1.1347 level and the EUR/USD could slip back towards the 1.1320 to 1.1290 region, it is certainly worth closely monitoring daily price closes on the U.S Dollar Index this worth also.


Written by Nathan Batchelor, External Analyst, ActivTrades

*The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication. All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided.