Gold, Oil and EURUSD Weekly Analysis - Week 45

Gold logs three consecutive weekly gains

Gold prices closed bullish by Friday’s session end, marking a three week consecutive sessions of gains. The gains came after last week, the Federal Reserve cut interest rates by another quarter basis point. Despite pledging to leave rates unchanged in the near term horizon, safe haven assets gained.

The rise in gold prices also coincided with a weakness in the US dollar. The greenback has been steadily gaining ground over the past few years. But over the past few weeks, it has been trending weaker. This led to some gains in gold besides the risk off sentiment as well.

From the daily chart, gold prices are clearly settled above 1497. This means that price could be looking towards testing the next main resistance level at 1522.78. A retest of this level will confirm the upside. However, if there is a breakout, then gold prices could be aiming to test the previous highs.

Crude oil prices recover from selloff

Oil prices were rebounding on Friday and the gains saw oil prices recovering from the slump from the previous sessions. This shows a retracement in the oil markets. However, price action is back to the trend line which has held up as resistance.

The gains in the oil prices came as the weekly rig count fell. The number of rig counts is essential as it shows the future potential of oil drilling. The gains were also led by some positive data from China on the manufacturing side.

The technical outlook shows that if the current momentum is maintained, then oil prices could possibly breakout higher. This means that oil will need to break past the trend line to confirm the upside. However, we expect some consolidation to take place first before anticipating any further gains.

Euro stabilizes above support

The euro currency was seen holding up after a brief spell of doubt. The currency pair broke past the level of 1.1111 – 1.1130 region. But price action was starting to look weaker. However, Friday’s bullish close saw the upside bias intact.

In the near term, the EURUSD could be aiming for the next resistance level at 1.1200. A test of this level for resistance could keep prices trading flat within the mentioned support and the resistance areas. However, the Stochastics oscillator is hinting at a bearish divergence.

If this divergence is confirmed then the EURUSD could be seen breaking below the support area of 1.1111 – 1.1130. This will then shift the bias lower. The support area at 1.0958 will be no doubt tested as the currency pair will likely establish support at this level.