Two trades to watch: EUR/USD, Gold

EUR/USD picks up from 2.5 month low. Attention shifts to ECB's Lagarde amid quiet calendar. Gold attempts a rebound as US treasury yields slip under 1.40%. Fed Williams to speak

Charts (5)

EUR/USD looks to ECB President Lagarde 

EUR/USD is picking up after hitting a 2.5 month low on Friday following the Fed’s hawkish surprise at the FOMC and following Fed Bullard’s suggestion that rates may need to rise in 2022 and advised that taper talk had started. 

The pair is heading back towards 1.19 as US treasury yields weaken on Monday. 

Looking ahead the economic calendar is quiet. All eyes will be on ECB President Christine Lagarde who is due to speak before the European Parliament Economic and Monetary Affairs Committee. Any comments regarding future monetary policy stance will be listened for. 

Where next for EUR/USD? 

Last week the pair broke below 1.20 – the 200 sma on the daily chart and the key psychological level in a bearish move. The RSI moved into oversold territory limiting further losses, caution should be taken before placing further bearish bets. Sellers could look for a move below 1.1830 low 23rd March before placing further bearish bets, potentially opening the door to 1.18 round number and 1.1760. 

Any meaningful recovery would look to retake 1.19 round number before targeting 1.1925 high April 27. It would take a move above the 200 sma and round number at 1.20 for the buyers to gain momentum. 

Learn more about trading forex

Gold in focus as treasury yields drop 

Gold prices tanked over 6% last week in its worst week in over a year. The Fed’s hawkish surprise caught the market off guard, boosting the treasury yields and the US Dollar; a move which dragged on non-yielding US Dollar denominated Gold. 

At the start of the week yields on the 10 year treasury have dropped heavily below 1.40%  and the US Dollar is easing off its two month high. 

Inflation and the Fed’s next move is likely to remain a key theme this week with Jerome Powell testifying before Congress and PCE data on Friday. 

US bond auctions and a speech by Fed Williams are under the spotlight in a quiet economic calendar. 

Where next for Gold? 

After six consecutive days of declines, Gold is attempting a move higher.  

Gold fell below its ascending trendline last week, it also broke below its 50 and 200 sma and moved back below the descending trendline dating back to August. 

The RSI is is oversold territory supporting a move higher before. 

Any recovery will need to retake 1800 the psychological number & resistance April 26, May 5. This could open the door to 1830 the confluence of the 50 sma and the descending trendline. The key 200 sma sits marginally higher at 1835. The zone could prove a tough nut to crack. 

Support is seen at 1660 the overnight low, ahead of 1745 and 1720. 

Learn more about trading Gold 

  1. How to trade with

    Follow these easy steps to start trading with today:

    1. Open a account, or log-in if you’re already a customer.
    2. Search for the market you want to trade in our award-winning platform.
    3. Choose your position and size, and your stop and limit levels.
    4. Place the trade.

More from Trade Ideas

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.