Gold, Oil and EURUSD Weekly Analysis - Week 42

Gold prices testing the trend line

The precious metal closed on Friday with some solid gains, rising 1.9%. This marks a second consecutive week of gains for gold. The precious metal was bullish on Friday after news that President Trump approved a smaller stimulus package. This led to a broader market rally, which included gold prices rising as well.

The current gains put gold prices right near the minor trend line that we have been watching. A breakout above this trend line could confirm further gains. This means that gold prices will next test the 2000 level. It will also invalidate the descending triangle pattern too.

However, a lot will depend on how prices close on Monday. For the moment, the Stochastics oscillator is also quite bullish, suggesting that the momentum to the upside may persist.

WTI crude oil at a critical level

Oil prices closed on a bearish note on Friday, losing 1.95%. However, price action remains at a critical level. Overall, the oil markets continue to remain choppy on the back of an uncertain global economic output. OPEC leaders had confirmed last week that oil demand could remain flat until 2030.

The current gains stalled near the 200-day moving average. However, the rally to this level came on the back of a double bottom pattern. As a result, oil prices will need to breakout above the 41.00 level.

This will potentially confirm further gains to the upside. In the likely event that oil prices fail near the current levels we could see a modest pull back taking place. This will continue to keep price action within the current sideways range.

Euro jumps as dollar weakens again

The euro currency rose 0.6% on Friday. The gains came after a brief spell of weakness. The gains were a result of the U.S. dollar reacting to the news out of Washington. After a bit of uncertainty, President Trump approved a smaller Covid stimulus bill. This extra spending helped to boost market sentiment.

As a result, the dollar fell, allowing the euro to make some modest gains. Price action has now cleared the 1.1800 level which was a key level in the past few sessions. A continuation to the upside could see the euro currency rising further.

The next main level will be the 1.1900 region. This will mark a retest of this level which previously held up as support. Therefore, if resistance is formed here, we could expect the euro currency to start weakening again.