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Gold, Oil and EURUSD Weekly Analysis - Week 25

Gold rises to fresh 2019 highs

Gold 1706

Gold prices continued the bullish mode as prices rose to a fresh 2019 high. The precious metal tested intraday highs of 1358 before giving back most of the gains. While closing in the red on Friday, the overall trend remains to the upside.

We expect gold prices to drift sideways for the most part in the coming week, in the run up to the FOMC meeting due on Wednesday. Investors are widely dovish on the Fed and expect to see the central bank set the stage for a rate cut sometime this year.

From a technical perspective, gold prices are likely to test the support at 1320 in the near term. A retest of this level with a firmer test of support will potentially attract new buyers into the market. This could set the stage for another leg of rally in the precious metal. The risk of course is in the event that gold prices slip up below the 1320 level. This will potentially signal a steeper correction in price.

Oil attempts to maintain gains for the second day

WTI 1706

WTI Crude oil prices continued to stay afloat with the rising tensions in the Middle-East and the possible rise of tensions between Iran and the U.S. The U.S. administration released pictures of a potential sabotage, allegedly by Iran.

The reports were dismissed by Iranian authorities. However, it is unlikely that the tensions will fade out anytime soon. This could see oil prices getting a boost. Despite the modest rebound, WTI crude oil prices will need to break out above 54.00 in order to confirm any signs of an upside.

The downside target of 50.00 remains a possibility in the near term. The price action could see some volatility as the OPEC and Russia meeting approaches. There is speculation that OPEC will continue with production cuts. This would put upside pressure on crude oil.

Euro extends declines, falling back to support

EURUSD 1706

The common currency was seen giving up the gains as the losses mounted by Friday’s close. The EURUSD was seen trading back at the familiar support level of 1.1224 – 1.1200 level. The declines came amid stronger data from the U.S.

The decline back to the support level for the EURUSD suggests that the momentum continues to remain flat. The initially recovery above the falling trend line is now seen to be weak. But the multiple retests to the support area indicate a possible risk that the EURUSD could break this support in the near term.

A close below the support level could no doubt indicate the downside bias in the common currency. However, we expect the EURUSD to be fairly supported at this level into next weeks’ FOMC meeting.

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