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Gold, Oil and EURUSD Weekly Analysis - Week 5

Gold on the rise again

XAUUSD 2701

The precious metal, although trading weaker near the top is looking to build up the upside momentum. The rebound comes after price action was seen trading flat near the seven year highs. The precious metal posted gains as risk sentiment fell pushing gold back into favor.

However, price needs to breakout above the 1571.50 level of minor resistance. This will confirm the upside and potentially put gold prices on track to rise to fresh highs. Adding to this view is the Stochastics oscillator as well, which is turning slightly bullish.

To the downside, failure to breakout above 1571.50 will see a possible move lower. For the moment, gold prices are trading flat within the 1571.50 and 1545.50 region. A downside breakout will signal a move to the 1522.80 level of support.

Oil prices down by over 2%

WTI 2701

Crude oil prices are down by over two percent into Friday’s close. The declines come amid a mix of bearish fundamentals. Firstly, the outbreak of the Coronavirus is seen impacting the global economic growth. This in turn is expected to hit the demand side, pushing prices lower.

Meanwhile, some OPEC members are mulling over the idea of extending production cuts into the end of 2020. At the last meeting, OPEC members agreed to extend production cuts into March. A decision, such as this could impact oil prices a lot.

For the moment, the declines stopped right near the 54.00 level, where we see a minor support level. There is a possibility that oil prices can rebound off this level. The Stochastics oscillator is well extended into the oversold level, adding to the upside bias.

Euro clears way to the downside

EURUSD 2701

The euro currency fell for the second consecutive day losing over 0.28% into Friday’s close. The declines came after the ECB’s meeting on Thursday. ECB Chief, Christine Lagarde gave a speech on Friday. She stressed on the risks to the Eurozone economic growth and addressed concerns on inflation.

With the EURUSD breaking past the major trend line, the downside is now apparent. The initial decline could see the EURUSD falling to 1.1000 level. Given the psychological importance of this level, we expect the declines to hold in the near term.

But the longer term support at 1.0958 is most likely going to be tested if the bearish momentum continues.

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