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Gold, Oil and EURUSD Weekly Analysis - Week 46

Gold prices resume declines

XAUUSD 1111

The precious metal posted strong declines last week. This erased the gains from the previous three weeks. The downside breakout now confirms that price action will be heading lower in the near term.

But questions remain as to how far the declines could go. The initial support is seen near the 1440 handle. Establishing support at this level will mean that gold could potentially see a modest bounce. We expect the gains to be limited to the 1497 level at the maximum.

A sideways range could be established between the said levels. But there is a risk that gold prices could decline further. A breakdown below the 1440 level will accelerate the declines. This will push gold prices down to the 1420 and even the 1400 region of support.

Oil price rally takes a short break

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Crude oil prices were subdued following the gains seen over the week. After oil prices managed to close above the falling trend line, the gains were limited. This could potentially see crude oil prices trading flat in the near term.

On a weekly basis, oil prices closed bullish. This erased the losses made from the week before. From a technical stand point, oil prices could be seen rising to the 64 handle eventually. But a lot will depend on the fundamentals and how they unfold. For the moment, the U.S. and China trade talks remain the pivotal narrative.

In the near term, watch out for the 58.00 handle. If minor resistance is established here, then oil prices could see a modest correction. There is also a hidden bearish divergence that is forming. This could possibly keep price action subdued to the downside.

EURUSD on track to test lower support

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The gains in the U.S. dollar has kept the euro currency subdued to the downside. Price action is now likely to test the lower support. Lack of any big news out of the Eurozone and the recovering sentiment in the U.S. markets keeps the euro pinned.

The support level of 1.0958 will be key as price descends to this level. There is a lower level marked at 1.0900. If prices slip below the initial support and extend declines to this level, then the EURUSD could be looking at further losses.

A breakdown below the previously formed lows will signal a possible new low coming along. However, for the remainder of the year, we expect price action in the EURUSD to remain subdued. We expect prices to trade sideways within the 1.0958 and 1.0900 region.

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