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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 04/09/19

Gold rebounds as recession fears strikes again

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The precious metal was seen extending gains for the most part this week. The rebound comes after gold prices closed bearish last week. Fears of recession rose once again after the U.S. ISM manufacturing PMI fell below the 50-index. A reading below 50 indicates contraction in the sector.

The weak reading saw the U.S. dollar falling, while investors piled into safe haven assets such as gold. XAUUSD is now trading close to the previously established six-year highs. However, it is unlikely that the current gains will be able to hold on.

In the near term, with the more important economic data such as the payrolls report due later this week, gold is likely to consolidate near the current highs. A strong close above 1534 is required in order to post further gains to the upside. In the short term, gold prices could remain range bound above 1520 handle.

Oil declines on trade war fears

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Crude oil prices were seen extending declines on Tuesday. The declines come after the U.S. markets opened following the Labor Day bank holiday. With the U.S. led tariffs coming into effect alongside some minor tariffs from China, oil prices tanked.

Fears that the trade wars will lead to a global recession that could dampen demand for oil sent prices lower. Oil prices were also weaker on a separate report that crude oil production increased in August, mostly due to Iraq and Nigeria.

From a technical perspective, oil prices continue to remain within the range. With previously established lows at 52.0 yet to be tested, it is likely that oil prices could remain confined to the range. A breakout from either the 52.00 support or 56.00 resistance is required to confirm the next direction in the trend.

EURUSD looks to rebound from two-year lows

EURUSD 0409

The common currency was seen testing new two-year lows on Tuesday. Price action fell to intraday lows of 1.0978 before rebounding higher on the day, albeit trading close to the opening price. The declines in the EURUSD came amid some volatility in the USD.

The euro however remains under pressure in the run up to next week’s ECB meeting. The European Central Bank is expected to announce its QE program as well as potentially cut interest rates even lower. The euro currency has been trading subdued as a result.

In the near term, price action could see limited gains. The resistance level at 1.1111 remains key to the upside. But ahead of this level, the trend line could act as a dynamic resistance. This will potentially lead to the EURUSD trading flat near the current lows.

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