Euro pares gains after populists push fizzles
The euro pared some of the earlier gains after the results of the European Parliament were released. The results showed that populist parties failed to make significant gains than earlier expected. This was boosted by the turnout, which increased for the first time in more than 40 years. The results also spelt the end for the centre-left and centre-right parties, which means that the parliament will be divided. The right wing members made significant gains in Italy, France, and in the UK. In France, Marine Le Pen’s National Rally party won in a bitter fight with Macron. In the UK, Nigel Farage’s Brexit party made most of the gains.
The price of crude oil rose slightly after Donald Trump said that he was not interested in a regime change in Iran. This eased the tensions among traders that the two countries were headed to a major conflict. In recent weeks, the US has sent its bombers to the Middle East and just last week, the Trump administration agreed to send 1,500 troops to the region. Iran on its part has warned the US against an attack, saying it would be the ‘most lethal warfare in history.’ The conflict between the two countries emerged after the Trump administration abandoned the Iran deal.
The sterling pared the earlier gains as investors continued to monitor the political situation. This is after Theresa May announced that she would leave her post early in June. Investors are concerned about the key contenders to replace her. First, they all seem to be comfortable with a no-deal Brexit and second, they will all face similar challenges to those faced by Theresa May unless a new election happens. This is because there are divisions among the conservatives. There are is also huge cross-party divisions. The volumes for sterling were limited as the country observed the bank holiday.
The EUR/USD pair rose in the morning session to a high of 1.1215, which is slightly above the 61.8% Fibonacci Retracement level. In the afternoon, the pair pared some of the losses and is now trading at the 1.1195 level. On the hourly chart, the pair is trading along the lower line of the Bollinger Bands. It is also slightly higher than the 50% Fibonacci Retracement level. It is also slightly above the support line shown below. The pair is likely to resume the upward trend to retest the previous high of 1.1215.
After making some gains in the morning, the GBP/USD pair started to decline in the afternoon session. The pair is now trading at the 1.2677 level, which is slightly lower than the day’s high of 1.2748. On the four-hour chart, this price is slightly below the 50-day and 25-day moving averages levels. The pair is also on a strong downward trend as shown with the trendline below. The pair is likely to continue moving lower to the 1.2600 support level.
The price of crude oil rose slightly today after geopolitical issues eased a bit. The XBR/USD pair is trading at 67.73, which is slightly above the 23.6% Fibonacci Retracement level. On the hourly chart, the price is between the middle and upper levels of the Bollinger Bands and slightly above the 25-day moving averages. As the OPEC meeting in June nears, there is a likelihood that the price will continue moving higher to the 68.54 level, which is also the 38.2% Fibonacci Retracement level.