Gold, Oil and EURUSD Weekly Analysis - Week 40

Gold closes the week with losses

The precious metal closed last week with losses as price settled near a two-month low. The declines come amid a broader sell off the markets. Many central bankers especially from the Federal Reserve struck a hawkish tone which helped to remove the bullish sentiment from gold.

Prices touched down to the 1850 handle last Friday. The previous two sessions closed rather flat, coming on the back of a strong decline. The daily stochastics oscillator is oversold and given the set up, we have reason to believe that gold prices could reverse direction.

The upside move could be limited to the 1900 level where resistance is likely to form. Here, we expect gold to hold steady. As long as the 1900 level is not breached, the downside prevails. However, gold will need to break past the 1850 lows to confirm further downside toward 1750 next.


Crude oil back near the 40-resistance level

Oil prices managed to recover from the losses and prices are now trading back near the 40 handle. On a weekly basis, oil prices posted a decline amid worries that fuel demand would be hit due to a resurgence of the coronavirus.

For the moment, oil gains are capped near the 50-day and 200-day moving average and the horizontal resistance level near 42.00. Only a strong breakout above this level could provide further gains in the near term. This would mean that oil prices should establish a support level near 42.00 after breaking out.

Thus, the bias remains to the downside as long as the 42.00 level holds. We expect the sideways range between 42.00 and 37.00 to hold in the near term. This sideways range could however further lead to possible declines later on. The next lower support is at the 40.00 handle.

WTI 2809

EURUSD hovers above 1.1600 handle

The euro currency closed the week with solid declines as prices almost fell to the 1.1600 handle. Price action is likely to test the 1.1600 level next week. However, we expect the support level to hold in the near term. This could mean that there will be some upside.

The declines in the euro currency comes amid the US dollar rising steadily. The sentiment for the USD is bullish at the moment and this is putting pressure on the euro. Also, the second wave in Europe is hitting businesses once again and weighing heavily on the region's economic recovery plans.

The stochastics oscillator is oversold and this could lead to a possible move to the upside. We expect a near term correction could hit 1.1800 level. However further gains above this level can be ruled out at the moment.


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