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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 10/06/20

Gold pares losses, recovering after two day gain


Gold prices rose steadily for the second consecutive day, erasing the losses from last Friday. The gains came amid a rebound in risk sentiment. With equities rising sharply, investors booked profit amid concerns that the US economy entered a recession in February this year. Furthermore, the FOMC meeting due this week also added to the flight to safety as the risky equity markets took a breather.

The current rebound in gold prices comes after the technical support area near 1683.40 held up. This has helped prices to recover strongly. However, the precious metal is trading flat within the range of 1729.89 and 1683.40.

Unless there is a strong breakout from either of these levels, gold prices might continue to remain trading in a range. The bias remains mixed for the moment. However, watch for any potential signals of a top forming near the 1729 level. This will give early indications of a move lower.

Crude oil prices decline amid uncertain fundamentals

WTI 1006

WTI Crude oil prices were trading negative on Monday and continued to remain uncertain on Tuesday. The uncertainty comes as oil prices are perched near a three month high. Despite the OPEC production cuts, surplus inventory still remains, which is estimated to be about 1 billion barrels. Concerns of a slower rebound in demand also helped to dent the market sentiment in oil markets.

Price action in oil shows a decline after the commodity briefly hit the $40.00 key psychological level earlier this week. The current declines are however limited. Therefore, the bias is still to the upside and for a move toward the 42.00 level.

In the event of a move below 38.00, then we expect a correction underway. However, oil prices need to post a lower high to confirm this move. In such an event, the downside target is seen at the 28.00 leve where support is most likely to form.

Euro recovers after declines


The euro currency is fulling recovering from the declines from Friday. This follows the US dollar which has remained weaker this week. The gains in the euro come mostly on the back of the USD extending its declines and ahead of the key FOMC meeting as well. The currency pair had briefly extended gains to a three month high before pulling back lower. However, with the recovery, prices are set to reclaim the previous highs.

The EURUSD currency pair is back to retesting the 1.1350 level once again. Prices previously closed near this level just on Friday last week before giving back the gains. For the moment, the bullish momentum needs to see a breakout above this level. This will confirm further upside in the euro currency.

Alternately, if prices fail to breakout, then we could potentially expect a correction lower. The lower support level near 1.1147 will be the downside target. But before this level, the euro must break down below the local pivot low of 1.1290. This will most likely confirm the downside for the euro.

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