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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 29/01/20

Gold prices fail to breakout higher

XAUUSD 2901

The precious metal is seen giving up the gains made earlier in the week. However, the retracement is currently limited to the support/resistance level of 1571.51. If this level holds, we could expect to see some consolidation near the current highs.

The precious metal will also be coming under pressure later in the week as the FOMC meeting gets underway. For now price action has closed with a higher high on a close basis. But there is a strong chance that the Stochastics oscillator is pointing to a divergence. This will suggest some downside correction.

A convincing breakdown below the 1571.51 could signal a move lower to the 1556.88 region, where the next support level exists. But given the bearish declines, it will be unlikely to expect another leg to the upside. Therefore, gold prices could be likely shifting lower in their bias over the near term.

Oil prices recovering from slump

WTI 2901

Crude oil prices have been steadily declining over the past few days. The declines are set off the fears of a contagion on the outbreak of the Coronavirus. The impact is expected to be felt economically, with China being the most hit.

This in turn is expected to dampen demand for crude oil. Meanwhile, OPEC members continue with their deliberations to extend the production cuts into end of next year. The next OPEC meeting is due to take place in March.

For now, the declines in crude oil are due to both fundamental and technical factors. The USD has also been stronger, putting a lid on the prices of crude oil. The current declines in oil prices saw a rebound off the trend line. This, it is possible for price action to recover in the short term.

Euro continues to remain weak

XAUUSD 2901

The common currency is seen posting steady declines with no signs of giving up. However, things could change later this week during the FOMC meeting. The Federal Reserve Bank will be holding its monetary policy meeting. No changes are expected to interest rates.

But the forward guidance could see some price adjustment in the USD, thus impacting the euro currency.

If prices manage to rebound off the psychological support near 1.1000 level, then we expect to see a minor retracement. To the upside, the gains will be capped near the 1.1050 level. This is where prices could establish resistance.

Therefore, in the short term, the EURUSD currency pair will be expected to remain trading flat within the said levels. Only a breakout from these levels will signal further direction in the currency pair.

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