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Two trades to watch: Gold, EUR/USD

By :   Fiona Cincotta , Senior Market Analyst
June 17, 2022 8:34 AM

Gold falls ahead of Powell

Gold prices are falling, snapping a two-day winning run. Gold prices jumped yesterday on the weaker USD and as recession fears lifted the precious metal.

Gold is on track to lose 1.5% across the week, a big week for central bank action.

Gold continues to trade at the will of the USD, which is tracing bond yields higher, boosted by hawkish Fed bets.

With the exception of the BoJ, central banks this week have been raising interest rates, which is bad news for non-yielding gold. The Fed hiked rates by 75 basis points, the SNB raised by 50 basis points, and the BoE by 25 basis points. T

Today, attention will be on a speech by Fed Chair Powell. More hawkish commentary could lift the USD and pull gold lower.

Where next for Gold prices?

Yesterday Gold price traded firmly higher, recapturing the 200 sma at 1842 before running into resistance at a three-day high of 1858.

The bears are back into control today, and the 200 sma is being tested. A break below here opens the door to support at 1828 the June 1 low. A break below here opens the door to 1805 the June low, ahead of 1792 the May.

Should the 200 sma hold,  gold could rise to test yesterday’s high at 1858 to expose the 50 sma at 1875.

EUR/USD falls towards 1.05 ahead of EZ inflation

EUR/USD is edging southwards after yesterday’s gains. A stronger USD and a cautious market mood are pulling the pair lower.

Eurozone fragmentation concerns and central bank divergence hurt demand for the euro. Whilst the ECB have shown that they are serious about containing yields, details have been slow to come through.

Eurozone inflation data is due and is expected to confirm the 8.1% record reading in the preliminary print. This would be up from 7.4% YoY.

Where next for EUR/USD?

EUR/USD ran into resistance 1.0790 and rebounded lower falling below the 20 & 50 sma. The pair found support at 1.0359 just above the 2022 low. The price then pushed higher to 1.06.

Failure to break above the 20 & 50 sna and the bearish RSI suggests that there could be more downside to come.

Sellers need to break below 1.0360 to extend the bearish trend and head towards 1.03.

On the upside, buyers will look for a move above 1.06 to expose the 20 & 50 sma at 1.0635 negating the bearish trend. A move above 1.0785 would create a higher high.


 

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