EUR/USD under pressure as COVID cases rise. Gold picks up from 2 week low as COVID fears return.

Unsplash

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 epicenter. 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 (FXE, EZU).

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.

Where next for Gold?

The Gold (GLD) 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.