Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 23/09/20

Gold prices make a sharp decline

The precious metal came under heavy selling pressure on Monday as prices lost ground. The upside bias in gold is now starting to diminish as the bearish momentum is currently in play. The declines in the precious metal came amid an all-round decline in the markets. Equities also were sold off amid a strong risk off reaction.

For the moment, gold prices are testing the 1900 level of support. If the precious metal loses this support, we expect further declines. But considering that in the past gold prices were kept getting rejected near this level, we could see some upside still in play. Still, the overall trend to the upside remains weak.

To the downside, below the 1900 level, the next key level of interest comes near the 1850 level. Here, the strong support could potentially push price action to remain in a sideways range within the 1900 range to the upside.

Oil prices trade weaker on a stronger USD

Crude oil prices also saw a strong sell off on Monday. The strength of the U.S. dollar was one of the reasons. The other being that with the onset of a second wave of the pandemic, many parts of Europe are dealing with a fresh wave. This potentially shows that demand for crude oil will fall strongly in the coming months.

As a result, oil prices nosedived on Monday. However, in the larger scope, oil prices are maintaining the steady range. Earlier, the rebound from the previous decline saw oil prices reclaiming the 41.00 handle. Here, we also see the resistance level being strengthened by the 200-day and 50-day moving average.

For now, the bias looks to the downside if oil prices fail to breakout above the 42.00 region. But before that, price action will need to break down past the previous lows near the 35.00 region. A break down below 35.00 could open the way to the 30's for oil prices.

Euro falls for three days amid virus concerns

The euro currency extended the bearish momentum from last Friday with price action falling for the third consecutive day. The declines come as a rise in the virus cases in Europe is pushing most countries to put in restrictions once again. This will potentially be detrimental to the already fragile growth prospects.

The U.S. dollar is rising at the same time, adding to the bearish momentum in the euro. But considering that the EURUSD has failed to make any proper correction so far, the declines are but expected. A continued decline will see the euro testing the 1.1600 level.

We expect the support at this level to hold out. Meanwhile, to the upside, the 1.1800 level is looking ripe for a retest. If the euro rebounds off the 1.1600 level, then we expect price action to maintain a sideways range below the 1.1800 region in the medium term.