Two trades to watch: EUR/USD, Gold
Fiona Cincotta November 22, 2021 8:13 AM
EUR/USD under pressure as COVID cases rise. Gold picks up from 2 week low as COVID fears return.
EUR/USD under pressure as COVID cases rise
EUR/USD lost over 1.4% last week in its worst weekly performance since early June. The pair dropped as core inflation was downwardly revised to 2% and ECB policy makers continued to push back on the prospect of a rate rise.
Meanwhile Fed speakers talked of accelerating the pace of tapering bond purchases.
COVID cases are back on trade’s radar with Europe the new epi-centre. Austria begins a full lockdown today and fears are rising that Germany could be next.
Eurozone consumer confidence data is due later today. With both COVID & inflation rising consumer morale is expected to deteriorate to -5.5 in November, down from -4.8.
The US economic calendar is quiet with just home sales data.Learn more about the Euro
Where next for EUR/USD?
EUR/USD has been trending lower since late May. The pair trades below its 50 & 100 sma and is testing the lower band of the falling channel.
The RSI has tipped into oversold territory so some consolidation around this level could be on the cards or a move higher, bears should exercise caution before taking out large sell positions.
Sellers will be looking for a move below 1.1250 last week’s low to open the door towards 1.220 the January ’20 high and 1.1170 the June ’20 low.
Meanwhile any move higher would need to retake 1.1370 November 18 high to bring 1.14 round number and 1.1460 last week’s high into focus.
Gold picks up from 2 week low as COVID fears return
Gold rebounds from a two week low struck on Friday after Fed speakers Clarida and Weller suggested that tapering of bond purchases could fasten as the economic recovery quickens. In this case interest rates could also rise faster.
However, the precious metal has picked up from lows overnight as rising COVID cases in Europe prompting safe haven inflows. However, US dollar strength, as it approaches a 16-month high could cap gains on the precious metal.
In the absence of any high impacting data COVID headlines and movements in the greenback are likely to drive gold prices.Learn more about Gold
Where next for Gold?
The Gold price rebounded off the rising trendline support at the start of the month and extended gains before running into resistance at 1876. The price has eased back from there slipping below the 50 sma and is approaching a key support at 1840.
The RSI is supportive of further downside.
Sellers are looking for a move below 1840 to expose the 100 sma at 1827.
Meanwhile, any meaningful recovery would need to retake the 50 sma at 1857 in order to test 1876. Beyond here buyers could gain traction to wards from 5-month highs.
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
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 Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.