European stock markets are rising on Friday, with developments in Greece support the optimism among the regional investors amid the report about the agreement on the debt-relief plan for the country after its bailout ends. The additional relief for the markets came from Italy, where the Lega has confirmed that euro exit is not part of government’s plan. Meanwhile, trade-war fears have abated but still persist in the global markets, which restrains investor bullishness. As such, Britain’s FTSE 100 adds 1.33 per cent to 7,657, France’s CAC 40 gains 0.90 per cent to 5,364, while German DAX 30 rises by 0.36 per cent to 12,556. US stock index futures gain cautiously ahead of OPEC decision.
Dollar is leading the way lower among major currencies, with EURUSD remains on the offensive since yesterday. The euro gained amid a general USD retreat due to a correction in the US Treasury yields and some easing of trade tensions. The neutral euro zone PMIs have helped the single currency as well. However, the broader picture remains negative for the euro as the ECB is still far from hiking rates, while the Fed continues to tighten its policy and stands ready to hike more aggressively down the road. From this point of view, the potential for a steady rise in EURUSD from the current levels looks rather low. The immediate resistance for the pair comes at the 20-DMA around 1.1670. Should the price fail to challenge this threshold in the short term, the sell-off will likely be resumed.
GBPUSD has also faced a tough local resistance at the 20-DMA marginally above 1.33, and the momentum already shows signs of exhaustion on the daily charts. The hawkish shift in the BoE stance on Thursday did manage to fuel demand for the pound which has recovered from 2018 lows at 1.30. And there is a chance that the pair will try to gain further in the medium term on expectations of a hike in August. Ге any bullishness will be limited as a number of Brexit-related issues remain unresolved. The EU summit on June 28 will be the key risk event for the sterling next week.
USDJPY shows mild gains within a narrow trading range. On the upside, the dollar’s strength is limited by the intraday resistance at 110.20, where the 14- and 200-DMAs converge, while support comes close to the 20-DMA marginally below the 110.00 level. The downside pressure on the pair has eased due to the return of a risk-on environment. However, the greenback set for weekly closing in the red due to the recent sell-off. The recovery potential looks limited at the moment as OPEC meeting unnerves investors ahead of the weekend.
Judging by OPEC comments ahead of the official meeting, the countries come closer to some agreement. The key is the highlight by Iran’s oil minister who said he is not pessimistic about a compromise. As the market has already put up with the prospect of increasing output, the latest signs allowed the prices to regain some ground due to some stabilization of the background. Therefore, Brent has jumped above $70, to the $74,50 area during the European session. But there is a risk that some market participants will opt to take profit ahead of tomorrow’s OPEC+ meeting, which may drag the prices lower again.
Gold prices try to recover on Friday, but the impetus it too timid to hope for a sustained rebound and to call a bottom for the precious metal. The asset refreshed 2018 lows around $1,260 yesterday and has gained a bit since. However, there are still no any technical or fundamental factors that could support a more aggressive bullish momentum at this stage. The local retreat in the buck is obviously not enough to fuel a rally in the yellow metal despite it is quite oversold. In the short term, the price needs to get back firmly above $1,270 to shrug off some bearish pressure.
Nathan Lambert, Head of Global FX Analytical Department