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Gold, Oil and EURUSD Weekly Analysis - Week 41

Gold finds support at 1850

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The precious metal managed to close last week with some modest gains, following the bounce off the support level near the 1850 handle. Following this rebound, price settled back near the 1900 region. This rebound continues to bring a mixed outlook in the precious metal. A close above the 1900 level could potentially signal further gains. This will also raise the bias to the upside.

To the downside, a reversal of the 1900 region is required. Following this, price action will need to break down past the 1850 handle. This will then open the way for gold prices to decline further toward the 1750 level of support. Here, we also see the 200-day moving average coming as support.

The next week will be critical as investors will get more news on the status on the President Trump who was diagnosed with the Coronavirus. Therefore, watch how price action reacts, especially as it approaches the minor falling trend line. A breakout of this trend line will open the way for gold prices to test the 1950 handle next.

Oil prices continue to extend declines

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Crude oil prices closed last week in the red, marking two consecutive weekly declines. This follows the failure to breakout above the 42.00 handle. The confluence of the 50-day and the 200-day moving average alongside the horizontal resistance level has kept a lid on the gains. With price action now heading back to the 8th September lows, oil prices will reach a critical point.

A break down below the 36.00 level marked by the previous lows could confirm the downside back to the 30's. This would mean that after nearly four months, oil price will be back to the same levels as they were around mid to late May.

But on the other hand, a decline to the 30's could mean that oil prices will be establishing support. Following the breakout above this level in May, oil prices barely made a pullback to establish support. Thus, a correction to this level might potentially cement expectations that the following move could be to the upside.

EURUSD might likely test 1.1900 again

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The common currency is holding on to the gains made from earlier in the week, after prices rebounded a few pips above the 1.1600 level of support. However, prices are now trading near the 50-day moving average that could keep a check on price action. Still, there is scope for the common currency to rise back to the 1.1900 level.

Establishing a firm resistance near the 1.1900 level will confirm the downside, subject to the euro closing below 1.1600 region. This will then open the way for a test toward the 1.1374 level where the 200-day moving average also resides. With the Stochastics oscillator turning bearish currently, the downside could gain weight.

Price action in the EURUSD continues to remain volatile. The U.S. dollar will now be influenced by how the Whitehouse officials will deal with the pandemic situation. A modest risk off rally could strengthen the U.S. dollar, which in turn could impact the price action in the EURUSD.

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