Gold prices continue to test the $2k level, while GBP/USD and EUR/USD have both seen a pop in the markets, resulting in the USD sagging. The VIX ‘fear gauge’ is also at a low point, indicating that investors are currently in a risk-on mindset. This week, there are several high-impact economic data releases scheduled, including the second look at US GDP and inflation figures for both the Euro Area and the US.
Technical analysis of gold and major currencies shows that gold prices are currently testing the $2k level, which could result in a significant breakout if the level is breached. GBP/USD and EUR/USD have both seen a pop in the markets, with the USD weakening as a result. This week, investors will be keeping an eye on the economic data releases, which could provide further insight into the direction of the markets.
Economic factors influencing the market include the surge in yields, which is likely a preemptive move to increase rates before the hefty $148 billion worth of Treasury papers goes on the market. Additionally, investors will be keeping an eye on the US GDP and inflation figures for both the Euro Area and the US, which could have a significant impact on the markets.
Key Takeaways
- Gold prices continue to test the $2k level, while GBP/USD and EUR/USD have both seen a pop in the markets, resulting in the USD sagging.
- Technical analysis shows that gold prices are currently testing the $2k level, which could result in a significant breakout if the level is breached.
- Economic factors influencing the market include the surge in yields and the upcoming economic data releases.
Technical Analysis of Gold and Major Currencies
Gold’s Test of $2k and Market Reactions
Gold has been testing the $2k level for a while now, and it has been met with mixed reactions from the market. Some traders are bullish on the precious metal, while others are bearish. According to the daily chart on TradingView, gold has been in a bullish trend since March 2020, with a swing low of $1,450.23 and a higher-low of $1,670.00.
The current pullback may be a retracement of the bullish trend, but it could also be a sign of a bearish trend forming. Traders should keep an eye on the support zone of $1,800.00, which has held up well in the past. If it breaks, it could lead to a fall to the next support level of $1,700.00.
Movement of GBP/USD and EUR/USD
The GBP/USD and EUR/USD have been showing signs of a bullish breakout, with both pairs popping higher in the market. The GBP/USD has broken through its resistance level of 1.3900, while the EUR/USD has broken through its resistance level of 1.2000.
According to the charts on TradingView, the GBP/USD and EUR/USD are both in a falling wedge formation, which is a bullish pattern. Traders should keep an eye on the re-test of the resistance level, as it could lead to a bullish breakout.
The US Dollar index (DXY) has been falling, which is a positive sign for both pairs. Traders should also keep an eye on the USD/CAD, which has been showing signs of a bearish trend. If the trend continues, it could lead to a bullish breakout for the CAD.
Overall, traders should be cautious when trading gold and major currencies, as the market is showing signs of volatility. It is important to conduct thorough analysis and keep an eye on the charts to make informed trading decisions.
Economic Factors Influencing the Market
US Inflation and Economic Data
The economic calendar for the upcoming week is packed with crucial economic data releases, including CPI data, retail sales, and non-farm payrolls. These data releases will be closely monitored by market participants as they could potentially influence the Federal Reserve’s monetary policy decision. The recent uptrend in inflation has raised concerns about the possibility of the Fed tapering its asset purchase program.
Monetary Policy and Interest Rates
The FOMC rate decision is scheduled for next week, and analysts are expecting the Fed to maintain its current monetary policy stance. However, the Fed Chair Jerome Powell’s comments during the press conference could potentially impact market sentiment. The recent banking crisis in China has raised concerns about liquidity, and the Fed’s decision to maintain its accommodative monetary policy could potentially provide support to the market.
According to the technical forecast, the yellow metal is testing the key Fibonacci level of $2,000. The RSI is indicating that the asset is overbought, and a pullback could be on the cards. Retail traders are currently net-long on gold, and this could potentially indicate a contrarian view.
GBP/USD and EUR/USD
The GBP/USD and EUR/USD have both experienced a pop in the market, and the USD has sagged. The technical analysis for the GBP/USD indicates that the asset is in a bullish trend, and the topside resistance could be tested. The technical analysis for the EUR/USD indicates that the asset is in a bearish trend, and the downside support could be tested.
AUD/USD and Crude Oil
The AUD/USD has been trading in a range, and the technical analysis indicates that the asset is in a neutral trend. The crude oil market has experienced a loss, and the technical analysis indicates that the asset is in a bearish trend.
The Federal Reserve’s monetary policy decision and Jerome Powell’s comments during the press conference could potentially impact the market sentiment. The market participants will closely monitor the economic data releases, and the Fed’s decision to maintain its accommodative monetary policy could potentially provide support to the market.
