The tensions between the two parties in the US reach the next level as the democrats want more money in their wish list of demands. According to the White House representative Karoline Leavitt, the administration is advocating to keep the government open and working. Moreover, she said that if the government is shut down, Democrats will be to blame for this. 

Donald Trump supports a budget extension, but according to his latest comments, his counterparts are not ready to discuss any solutions. While the debate in the United States continues, the US dollar may lose further ground in the financial markets.

EUR/USD: European PMIs Put Pressure on Euro, But Recovery Came Very Soon

Manufacturing activity contracted in September in the Eurozone according to fresh PMI releases. However, services managed to accelerate even beyond forecasts. This mixed data increased volatility, but markets are now focused on the US PMIs. Moreover, on Friday, the US Core PCE Price Index will be released, which may add some more volatiltiy to financial markets, especially if the final reading will be beyond forecasts.

On the technical analysis side, EUR/USD remained above the dynamic support level, indicating the bullish pressure with the RSI indicator close to the overbought area. Buyings from these levels are unlikely as a correction may take place. Traders can place buy stop orders above 1.1820 or close to the dynamic support. If a breakout occurs, traders can find short-selling entry points below the dynamic support at 1.1760.

GBP/USD: The Currency Pair Restores After a Weaker PMI Data

The British PMI data was weaker than expected as the Composite index dropped to 51.0 in September after reaching 53.5 in August. Traders and investors are anticipating the US PMI data that will be released later on Tuesday, as well as the Fed Head Powell speech, to see some fresh cues on the further monetary policy steps in the United States. 

Apart from this, market participants seek fresh cues about the monetary policy steps that may be taken by the Bank of England. The central bank held its rate at 4%, which means that the officials will stick to a more cautious approach. 

From a technical analysis perspective, the British pound remains above the dynamic support level, indicating positive market sentiment. Traders can go long from above 1.3530 or can look for some buy entries close to the dynamic support. In case of a breakout, the currency pair may plunge further, opening short-selling opportunities from below 1.3480.

WTI: Oil Is Gaining Ground

Oil lost ground on Monday due to fears of oversupply. According to sources, Iraq, the second-largest oil producer of the OPEC+ cartel, increased its oil production by 3.4 billion barrels per day, which may create some oversupply in the market. However, on the longer distance, ongoing tensions in Europe still support oil prices as there are risks of oil supply disruptions and a shortage of energy in the financial markets.

From the technical analysis perspective, oil moved above the dynamic resistance level and continues its upside. There are risks of a downside correction towards the dynamic support, from where, by the way, traders can add to their long positions. The downside will be possible if oil breaks below the dynamic support again. Short-selling positions are preferable below 62.20.

Gold: XAU/USD Continues Its Rally Amid Lower Rates and Higher Inflation

The debates in the US about the possible shutdown spur the gold price as well. Currently, the precious metal is supported from various sides as the fears of growing inflation offer some additional fuel to it. The expectations of further interest rate cuts in the United States provide additional support to the precious metal. Moreover, geopolitical tensions in Europe and in the Middle East support the safe-haven asset as market participants fear escalation.

From a technical analysis view, gold made another significant growth leap on Tuesday and seems to target 4,000 in the longer term. However, as for now, a downside correction or at least a consolidation is possible.