- The dollar falls against most of the majors while gold reaches 7.5-year highs.
- The German minister calls for a temporary ban on Chinese takeovers.
- The escalation of US-China or EU-China tensions could cap the rise in EUR / USD.
The gold rally to multi-year highs is likely to weigh on the US dollar and push the EUR / USD higher on Monday.
The currency pair is currently trading at 1.0823, which represents a gain of 0.10% on the day, after recording a low of 1.0807 during trading hours in Asia.
Meanwhile, gold is trading at $ 1,760, the highest level since November 2018, and is up nearly 4% from the low of $ 1,693 observed on May 12. In particular, the yellow metal flashes green for the fifth consecutive day.
The metal appears to be pulling offers, perhaps in response to escalating tensions between the United States and China over the coronavirus epidemic. In addition, Federal Reserve Chairman Powell said over the weekend that the US economy may need more support from the central bank and Congress.
The sustained rise in gold, a strong currency with a limited supply, seems to be fueling widespread dollar losses. For example, growth-linked currencies like the AUD and the NZD posted gains of 0.4% against the US dollar.
In the future, the rise in the EUR / USD could slow down if China opposes the German minister’s call to the European Union to block the takeovers of Chinese companies.
“We have to see that Chinese companies, partly with the support of public funds, are increasingly trying to buy European companies that are cheap or have experienced economic difficulties due to the coronavirus crisis,” said Manfred Weber , a senior German official. curator and head of the center-right EPP group in the European Parliament, according to Reuters.
In addition, US-China trade tensions are already on the rise and could weigh on risky assets. On the data side, the monthly report of the German Bundesbank should be published on Monday. On the other side of the pond, the focus will be on the NHB housing market index (May).