Two trades to watch: Gold, EUR/USD

Gold rises ahead of Fed rate decision. EUR/USD holds steady with EZ consumer confidence and the Fed in focus.


Gold rises ahead of Fed announcement 

Gold has found support from the unfolding Evergrande crisis. The risk off theme amid fear of contagion have helped the bulls take gold mildly higher. 

Gold is holding onto recent gains, as investors look ahead to the Fed. The US central bank is broadly expected to hint towards tapering. However, the risk of disappointment exists owing to Delta and Evergrande uncertainties. 

The absence of an announcement from the Fed could see Gold extend its gains. However, should the Fed make a surprise hawkish shift then the US Dollar could rally and drag on the precious metal. 

What to expect from the Fed 

Where next for Gold price? 

Gold rebounded is extended its recovery from 1741. The price is currently testing the 50 sma on the four hour chart at 1777. A close above this level could see the price continue its recovery to test the 200 sma at 1785 and on to 1800 the round number. 

The RSI is in bullish territory and pointing higher, suggesting there could be move upside to come. 

On the downside, failure to break above the 50 sma could see the price head lower towards horizontal resistance turned support at 1665. A break below here could open the door to 1741 the September low. 

 Gold chart

EUR/USD steady with EZ consumer confidence & FOMC in focus 

After three straight days of losses EUR/USD is holding steady. Market sentiment is improving slightly surrounding Evergrande as it said it can pay a coupon tomorrow, although another real-estate player suspends bond trading, weighing on the mood.  

Earlier in the week two ECB officials acknowledged the risk of higher inflation hinting towards a tighter bias for monetary policy. 

Eurozone consumer confidence data is due and expected to show a decline for s third straight month. 

All eyes are on the Fed on FOMC day. No changes in policy are expected. Fed Chair Powell is expected to hint towards tapering. As a result, the risk is no mention, which could boost EUR/USD higher. 

Learn more about the Fed 

Where next EUR/USD? 

EUR/USD has been trading in a descending channel since the start of the month. It trades below its 50 & 200 sma on the 4 hour chart and the 50 sma appears to be crossing below the 200 sma in a death cross formation a bearish signal. The RSI is in bearish territory, although points higher. 

Immediate support can be seen at 1.1715 the weekly low and 1.1700 the round number, September low and the lower band of the falling channel. 

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