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Investors' attention is shifting from the world central banks towards the G20 leaders. That way, Trump and Xi Jinping’s meeting to discuss the China-US trade deal has the greatest potential to impact on the markets.

It is hoped by investors that negotiations finally get off the ground. In addition, the focus is still on the tensions existing between Iran and the United States. Wherein, the markets have waited in anticipation for the “significant” sanctions set to be imposed by Trump, following Iran’s shooting down of an unmanned American drone.

This, in turn, has stimulated an Oil price rise, as well as stirring up investors' interest in gold as a defensive asset – due to more cautious decisions at the end of the month and quarter. It could turn out to be the main driver of the last week of June, becoming the main springboard for important G20 statements – especially on Iran and trade negotiations.

Stocks

S&P500 was able to update the historical highs on Friday but was under pressure in the last trading hours. The technical picture places the cards in the hands of the bulls, demonstrating that the index has not reached the overbought area yet. However, it should be noted that at the end of Friday's trading session, sales increased on the backdrop of profit taking.

EURUSD

The US dollar depreciation continues to gain momentum. EURUSD rose to 1.1370, having made a breakthrough from levels below 1.12 to 1.1370 last week. From a technical analysis side, the close of the week had more effect on the markets than the significant resistance at 1.1300, around the 200-day MA. Fixing above these levels may strengthen the EURUSD buy-orders and mark the final break of the dollar’s upward trend.

Gold

Gold exceeded 1400 on Friday but it remains above this level on Monday morning, even though the quotes retreated from the local maxima. The dollar has weakened, due to the Tehran and Washington tensions, the US-China trade negotiations failure, and the softening of the global central banks’ positions. Consequently, this has contributed to the Gold strengthening by more than 7.5% since early June. In addition, the breakthrough of multi-year highs caused a triggering of market activity on the stop orders and a closing of sell-positions. In the short term, Gold is overbought and may fall victim to a seasonal profit-taking that will become clearer by the end of the trading week.

• Rates: Core bonds prone for additional profit taking
  Friday's profit taking move on core bond markets can continue early this week with momentum building into Friday's Trump/Xi Jinping meeting and key technical levels (US/German 10y yield) holding. The US's end of month supply operation and German Ifo business sentiment could further do the trick.
• Currencies: EUR/USD extends gain beyond 1.1350, improving the technical picture
  On Friday, a better than expected EMU PMI helped EUR/USD to regain the 1.1350 resistance. Today, euro traders look out whether German Ifo business climate confirms last week's PMI's. At the same time, underlying USD softness persists. The technical picture of EUR/USD improves further. 1.1450 is next reference on the technical charts

The Sunrise Headlines

• A choppy Wall Street trading session ended in red as markets pondered geopolitical and trade risks last Friday. The Nasdaq underperformed (-0.24%). Asian stocks are trading mixed with Japan outperforming (+0.2%).
• President Erdogan's AKP lost the mayoral election redo in Istanbul last Sunday. Imamoglu, who narrowly won the initial election, further increased its majority, having about 54% of the votes. The Turkish lira advances about 1%.
• After calling off Iranian air strikes after it lost a drone, the US will impose new yet unspecified sanctions on the country today. President Trump added however he is still willing to negotiate without preconditions.
• Two EU officials said the European Commission will not (yet) formally start the excessive deficit procedure against Italy when it meets tomorrow. By pausing the procedure, parties buy time to a compromise and hope to avoid escalation.
• RBA governor Lowe warned that monetary policy easing is unlikely to be as effective as in the past. He urged governments to have a number of “shovel ready” infrastructure projects ready in case of an economic slowdown.
• An estimated 250 000 demonstrators gathered in Prague yesterday to demand PM Babis' resignation. Babis allegedly used European Union subsidies for building a hotel but denies any wrongdoing.
• Today's economic calendar eyes rather empty. The IFO index is scheduled for release in Germany. US VP Pence postponed his China speech due to “progress in conversations between Trump and Xi”.

Currencies: EUR/USD Extends Gain Beyond 1.1350, Improving The Technical Picture

EUR/USD regained 1.1350 resistance

The euro took a weak start on Friday, but any downside drift was soon blocked by better than expected EMU PMI's. The eco picture remains fragile but that was already discounted in EMU (interest) rate markets. European yields rebounded a few bp, further protecting the the downside of the euro. At the same time, US data and Fed comments confirmed a soft Fed approach. The intraday EUR/USD rise accelerated later in US dealings as the pair reached the 1.1340/50 resistance area. EUR/USD closed the session at 1.1369. The USD/JPY decline from earlier last week slowed. The pair closed the session little changed at 107.32

Asian stocks are trading mixed with geopolitical topics dominating the headlines. Tensions between the US and Iran remain elevated. At the same time, US and China officials are preparing the meeting between president Trump and Chinese president Xi at the end of this week. A rise in US equity futures suggests that markets take a cautiously constructive view. EUR/USD (1.1375 area) is holding near recent top. USD/JPY hovers in the mid 107 area. The Aussie dollar rebounded after RBA's Lowe indicated that there are limits to what (global) monetary easing can do to stimulate growth. AUD/USD is trading north of 0.6950.

Today, the eco calendar is moderately interesting with the Chicago Fed national activity index, the Dallas Fed manufacturing index and German Ifo business climate. The German Ifo is expected to ease slightly further. Markets will look out whether the Ifo can copy Friday's upside surprise of the EMU PMI. The euro already succeded quite a strong performance of late. However, especially the trend toward a weaker dollar looks well established. In this respect, we also look out for comments on FX from US officials in the run-up to this week's G20 meeting. EUR/USD breaking above the 1.1350 area improved the technical picture in this cross rate. Next resistance is seen in the 1.1450 area.

Sterling remained in the defensive last Friday as both contenders in the race to the conservative leadership are stepping up their campaign rhetoric. There are no important eco data in the UK today. Polls suggest that Boris Johnson is losing quite some of its advantage over Jeremy Hunt. However, for now, this doesn't help sterling much. Visibility on the next steps in the leadership's race and in Brexit remains low. We expect EUR/GBP to hold rather strong. Overall euro strength might also protect the downside of EUR/GBP.

EUR/USD breaking north of 1.1350, improving the ST technical picture

EURUSD staged a quick recovery last week, with the price crawling above the 200-day simple moving average (SMA) for the first time in more than a year. On Monday, the bullish pattern gained extra credence as the pair extended its positive momentum towards a new three month high of 1.1385.

According to the RSI, which maintains a positive slope above its 50 neutral mark, there is still some upside in store. The indicator, however, is not far above the 70 overbought level, a sign that downside corrections may soon emerge. Stochastics are also approaching the overbought region.

Another step higher may meet nearby resistance within the 1.1418-1.1450 area. Breaking that zone, the bulls could next head towards the 1.1514-1.1560 territory.

The 200-day SMA currently around 1.1346 and near a former key resistance area should be closely watched in case the bears retake control. Should the price drop back below the line and more importantly under the April peak of 1.1320, the target will shift towards 1.1262, the inside swing high of May 13.

Meanwhile in the three-month timeframe, neutral conditions are still in place as long as the market keeps trading under the 1.1450 level.

Summing up, EURUSD is looking cautiously bullish in the short-term and neutral in the medium-term.

The British pound is gaining ground against the greenback Monday after the US dollar index suffered heavy losses on Friday. A sustained move above the 1.2770 resistance level could spark a breakout in the GBPUSD pair towards at least the 1.2840 level. If sellers fail around this key area a decline and technical test back towards the 1.2710 level should be expected.

The GBPUSD pair is only bullish while trading above the 1.2730 level, key resistance is found at the 1.2770 and 1.2840 levels.

If the GBPUSD pair trades below the 1.2730 level, key support is found at the 1.2710 and 1.2660 levels.

The euro has opened the new trading week strongly against the US dollar after the pair closed the week above its 200-day moving average. Bulls could target a major breakout above the 1.1400 level, with the 1.1440 and 1.1500 levels the major resistance areas to watch. If sellers move price back under the 1.1347 level the EURUSD pair could see a strong retrace back under the 1.1300 level.

The EURUSD pair is only bearish while trading below the 1.1347 level, key support is found at the 1.1321 and 1.1290 levels.

If the EURUSD pair trades above the 1.1347 level, key technical resistance is found at the 1.1400 and 1.1440 levels.

Bitcoin has surged above the $10,000 level for the first time since March 2018 as bulls broke through the five-figure mark with ease. Short and medium-term technical readings are extremely overbought at present, leaving the BTCUSD pair open to large profit taking. Failure to make new higher highs may attract a move back towards the $10,000 level.

The BTCUSD pair is bullish while trading above the $10,600 level, key resistance is located at the $11,000 and $11,400 levels.

If the BTCUSD pair trades under the $10,600 level, sellers may test towards the $10,000 and $9,800 support levels.

The price of crude oil rose in the morning session as tensions between the United States and Iran continued. Tensions started after a number of oil tankers were attacked at the Strait of Hormuz. The US blamed Iran for the attacks. A few days later, Iran shot down an American spy drone. In response to this, Trump ordered a retaliatory attack on Iran but cancelled it at the last minute. Over the weekend, US Secretary of State, Mike Pompeo announced that more sanctions on Iran will be put in place this week in response to the attacks. In addition to the Middle East tensions, traders are paying attention to the upcoming OPEC+ meeting in Vienna this week.

On Friday, US stocks continued rallying after receiving support from the Federal Reserve. In the monetary policy meeting held on Tuesday, members agreed not to hike interest rates. There was also consensus that members will adjust the interest rates policy in response to the weak US economy. Recent data has shown that the US and the global economy is easing as the trade war intensifies.

Later today, investors will receive sentiment data from Germany. The German ifo business climate index is expected to decline from 97.9 to 97.4. The current assessment is expected to decrease slightly from 100.6 to 100.3 while the business expectations data is expected to decline from 95.3 to 94.6. In the United States, investors will receive the Chicago Fed national activity for May, which is expected to improve slightly from -0.45 to 0.10.

EUR/USD

The EUR/USD pair was relatively unmoved in the Asian session today. It is trading at 1.1380, which is along the upper line of the Bollinger Bands. The RSI has moved to the overbought level of 70 while the Bulls Power has continued to rise. The price is above the 25-day and 50-day moving averages. With no major economic data expected today, the pair could remain relatively unchanged.

XBR/USD

The XBR/USD pair rose today as tensions in the Middle East increased. The pair is now trading at 64.61. On the four-hour chart, the price is above the 50-day and 25-day moving averages while the RSI has remained above the overbought level. The signal and the RVI lines of the relative vigor index too has continued moving higher. The price could continue to soar as tensions rise and ahead of the OPEC+ meeting.

BTC/USD

The price of Bitcoin continued to soar as investors cheered the recent entry of Facebook into the industry. The BTC/USD pair reached a high of $11,240, which is the highest level since last year. On the daily chart, the pair is above all the short and medium-term moving averages while the RSI has continued to remain above the overbought level. The signal line of the MACD has also continued to rise. With the momentum being high, the price could continue moving higher.

Daily Pivots: (S1) 1.1310; (P) 1.1344; (R1) 1.1405; More......

Intraday bias in EUR/USD remains on the upside at this point. Current rise from 1.1107 bottom is in progress for 100% projection of 1.1107 to 1.1347 from 1.1181 at 1.1142 first. Break will target 161.8% projection at 1.1569 next. On the downside, below 1.1317 minor support will turn intraday bias neutral and bring consolations. But outlook will stay bullish as long as 1.1181 support holds.

In the bigger picture, considering bullish convergence condition in daily and weekly MACD, a medium term bottom should be in place at 1.1107 after hitting 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. Further rise should be seen to 38.2% retracement of 1.2555 to 1.1107 at 1.1660. Reactions from there could indicate whether rebound from 1.1107 is a corrective rise or reversing medium term trend.

The precious metal continued its bullish trend, as it closed Friday with 5 consecutive weeks of gains. Gold prices briefly tested highs of $1400 an ounce before retreating back to settle at $1399.29. The gains come as most of the central banks shift to a dovish bias alongside some global uncertainty on trade.

Will Gold Pull Back from the Current Highs?

The XAUUSD could see some form of a pullback in the near term, especially after testing the 1400 level. The immediate lower support is seen at the 1354 handle. Establishing support at this level could keep the bias to the upside. However, following the pullback, gold will need to break past the current highs above 1400 to keep the gains coming. To the downside, a close below 1354 could send gold lower to the 1320 support.

Daily Pivots: (S1) 1.2677; (P) 1.2712; (R1) 1.2783; More....

Intraday bias in GBP/USD remains on the upside for the moment. Rebound from 1.2506 short term bottom would extend to 55 day EMA (now at 1.2800). We'd expect strong resistance from 38.2% retracement of 1.3381 to 1.2506 at 1.2840 to limit upside. On the downside break of 1.2642 minor support will turn intraday bias back to retest 1.2506 low. However, sustained break of 1.2840 will bring stronger rise to 61.8% retracement at 1.3047 next.

In the bigger picture, down trend from 1.4376 (2018 high) is still in progress. Break of 1.2391 would target a test on 1.1946 long term bottom (2016 low). For now, we don't expect a firm break there yet. Hence, focus will be on bottoming signal as it approaches 1.1946. In any case, medium term outlook will stay bearish as long as 1.3381 resistance holds, in case of strong rebound.