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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 25/09/20

Gold drops to a two-month low

XAUUSD 2509

The precious metal continues its correction as a stronger dollar is pushing prices lower. The declines in gold prices started since Monday's open. However, given the fact that gold failed to make any progress to the upside, the declines were but expected. While gold had earlier risen sharply on account of concerns on inflation, that hasn't been the case this time with most central banks holding back from further easing.

The precious metal has lost the 1900 support and price fell to the 1850 handle. We are currently seeing a rebound near this level. Price action could end up trading sideways between the 1900 and 1850 level in the near term. Unless there is a strong breakout above 1900, we expect the downside bias to remain.

To the downside, the outlook is quite possible as a decline below 1850 could trigger further declines. The next main support level is seen only at the 1750 handle. This will mark a sharp decline in the gold prices. But for the moment, we should wait and watch how prices unfold near the 1900 region.

WTI Crude oil steadies between 41 and 37

WTI 2509

Oil prices are stabilized after prices fell to a three month just a few weeks ago. Following this decline, the commodity managed to rebound but price action is once again caught within a range. Oil prices continue to remain volatile amid both bullish and bearish news. The storms in the Gulf of Mexico managed to push prices lower, but weaker inventory report saw the commodity giving back the gains.

Price action is showing signs of a positive close after nearly three days of declines. Still, we expect the 41.00 – 42.00 level to hold up for the moment. This could mean that oil prices will once again enter a sideways range. With the previous breakout heading nowhere, oil prices will need to rise strongly above 42.00 for any further signs of gains.

For the moment, the sideways range comes at a risk of a move lower once again. The previous lows near 37.00 is holding up for the moment. But this level could be tested once again. If oil prices fail to form support near the 37.00 handle, then the declines could lead to a touchdown near the 35.00 handle next.

EURUSD down to a two-month low

EURUSD 2509

The euro currency is bearish with prices gradually giving up the support levels. The common currency is down to a two-month low as the USD is now trading stronger. This comes as various Fed members have been giving speeches. More importantly, comments from Fed Evans, which was hawkish added to the USD strengthening even further. This week, Fed Powell gave his testimony to Congress as well.

The currency pair broke past the 1.1700 handle and extended declines down to the 1.1626 level before posting a modest recovery. The near term gains could see the EURUSD rising back to retest the 1.1700 level. If resistance forms here, then we could expect to see another leg lower.

To the downside, the 1.1600 level will be the next big test for the euro. If the common currency breaks down below this level, we could see sharper declines. Price action could eventually correct lower toward the 1.1371 level which is pending a retest of support for a long time.

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