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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 18/03/20

Gold attempts to rebound after sell off

XAUUSD 1803

Gold prices are looking to recover from some of the losses from earlier in the week. Following the Fed's rate cut and restarting the QE program, the precious metal is seen rebounding. However, given the market conditions, there is no telling when volatility will rise again. The safe haven failed over the week as it too posted strong declines due to the market turmoil.

From a technical stand point, gold prices are recovering off the support area of 1481. If this upside continues, then we expect XAUUSD to rally up to 1578 handle where support has been previously established. For the moment, it will be interesting to see how gold prices close.

A doji or another reversal pattern could confirm this view. The Stochastics oscillator is also forming a hidden bullish divergence which gives bias to this view. Alternately, a break down below this level will see some further declines.

Oil stabilizes even as demand set to fall

WTI 1803

Crude oil prices have stabilized above the $27 handle even as economists predict that demand will fall rapidly. With many of the world economies going into a lockdown, demand for crude oil is expected to fall. Still, Saudi Arabia apparently is flooding the oil markets after booking oil tankers, in a bid to flood the oil markets.

WTI crude oil remains pressured to the downside, with prices consolidating just above the support level of $27.80. The consolidation could go either way with a possibility for oil prices to potentially retest the support area that was previously established.

It is likely that price action will retest this level more firmly before rebounding. To the upside, the fundamentals are currently not supporting this at the moment. Thus any retracement will see a possible selling that could keep prices pressured to the downside.

Euro continues its descent as USD holds steady

EURUSD 1803

The euro currency is losing ground to the dollar. Amid the market uncertainty, investors are turning to the safe haven bid of the U.S. dollar. With Europe being badly affected by the pandemic, the common currency is also coming under pressure. Given the fact that the ECB only pledged easing measures but left interest rates unchanged, the euro is coming under selling pressure.

Price action is currently challenging the 1.1000 level. Given the psychological importance of this support level, we expect prices to rebound in the near term. However, the upside will be limited for now. We do not expect the EURUSD to retrace back to the resistance level of 1.1400.

To the downside, the breakdown below 1.1000 level will see a possible move lower to the 1.0958 handle. Given that this support level has previously held multiple tests, we expect this to hold out in the short term.

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