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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 10/01/20

Gold prices decline for the second day

XAUUSD 1001

The precious metal is seen giving back the gains for the second consecutive day. The declines were onset after gold prices reached a new seven year high just earlier this week. The current declines come amid improving market sentiment with positive trade deal news between the U.S. and China.

Price action in XAUUSD indicates that the resistance level of 1556 is in play. Failure to close convincingly above this level indicates weakness to the bullish momentum. The next main support is seen at the 1522 handle. A retest of this level will potentially renew the upside bias.

We expect that gold prices will remain caught within the 1556 and 1522 levels in the near term. A breakout from this level is required to set the direction. At the moment, the bias remains to the upside in the long term. There is potential for gold prices to test the 1600 level eventually.

Oil prices fall as Middle east tensions de-escalate

WTI 1001

Crude oil prices are giving back some of the gains made from earlier this week. Prices of WTI crude oil touched highs of 65.62 just before prices fell sharply. The gains initially came on account of the U.S. and middle east tensions. Iran responded by attacking some U.S. sites in Iraq. However, President Trump was quick to dismiss the threat.

This led to oil prices giving back the gains. Technically, price action has tested the resistance level of 66.00 and 65.00. The strong declines off this level indicates further downside momentum will pick up. Price action in crude oil is on track to test the dynamic support of the rising trend line.

A break down below this trend line will signal further declines in the near term. The next main downside support is seen at the 58.00 handle. Given that there is a confluence of the trend line and horizontal support, we expect prices to hold here.

Euro continues to decline and likely to settle into a range

EURUSD 1001

The euro currency is posting declines after prices failed to rebound off the support area near 1.1130 – 1.1111. The declines come amid the U.S. dollar gathering strength. The dollar had weakened over the last week of December. But a mix of fundamentals and geo-politics is seen the dollar finding favor.

The next move in the EURUSD could continue to the downside. The next main trend line will be coming under pressure in the short term. A break down below this major trend line will confirm the downside towards the 1.0958 level.

There is a strong chance that the EURUSD will retest this level initially. A rebound is quite likely keeping price action to trade back into the long term range since August 2019.

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