Euro tests major support despite the S&P500 record highs: Market review

U.S. indices are in retreat after the record-high closing. Dollar marked the important breakthrough to EUR and GBP.

Stocks The S&P 500 and Nasdaq were closed at record highs on Tuesday thanks to strong earnings reports of American companies that have support risk demand. However, on Wednesday morning, stock indices rolled back from the reached highs. The dollar growth in the area of 6-month highs acts as a deterrent for stock indices. It is also worth paying attention to the Chinese markets are in decline, despite announced stimulus from the government intended to boost economic growth. This may be an early sign of the market growth slowdown.

EURUSD The pressure on the single currency on Tuesday intensified, and at some point, the EURUSD dropped below 1.1200 – the former support level of the last five months. The euro rebound at the end of the day on Tuesday looked more like intraday correction attempt than major support. Apparently, the EURUSD downward trend now looks predominant in the market. According to the technical analysis, EURUSD closing Wednesday below 1.1200 could be a harbinger of a further decline in the pair.

GBPUSD The British pound broke through an important support level on Tuesday in the form of a 200-day moving average. As a result, pressure on the GBPUSD has intensified and took the pair to 1.2920 at the time of writing. It is worth noting that the decline under the 1.2965 finally marked the break of the upward from December last year. The next targets for bears in a pair can be levels 1.2800, the area of the previous local lows.

Gold Gold is experiencing increased pressure, partly due to the strengthening dollar, and partly to the high demand for risk assets, which suppresses the demand for defensive assets, which include this precious metal. As for technical analysis, remaining close to 1270, gold is testing downward channel support and has not yet entered the oversold area. Nevertheless, there are high chances for a local rebound within a downward trend, but the growth of markets and the dollar may increase the pressure on gold.

Alexander Kuptsikevich, the FxPro analyst