EUR/USD falls after weak German consumer confidence and on a stronger USD ahead of the Fed rate decision. Gold extends losses with the Fed & Biden set to direct Gold.

EUR/USD Will Powell boost the US Dollar? 

German consumer confidence unexpectedly tumbled in May to -8.8, down from -6.2 in April. Analysts had expected an improvement in morale to -3.5. 

Christine Lagarde is due to speak.

The US Dollar traced yields higher after upbeat US consumer confidence data on Tuesday. The US Dollar remains firm ahead of the Fed rate decision later. No change in policy is expected but any hints of earlier tapering could boost the greenback and drag the pair lower. 

Where next for the EUR/USD? 

The EUR/USD is trading mildly lower ahead of the European open. 

The pair trades below its descending trendline dating back to the start of the year, which capped gains earlier this week. 

However, near term the pair is supported by an ascending trendline dating back to the start of the month. The RSI is pointing lower although sits above 50. 

Immediate support is seen at 1.2050 the 100 SMA and the ascending trendline. A break below this level could see 1.20 key psychological level come into play ahead of a move towards the 50 EMA. 

On the upside, 1.2110 offers strong resistance with the descending trend line support and this week’s high. A break above here could open the door to 1.2145 (UUP, FXE). 

Gold looks to Fed & Biden for direction 

Gold came under pressure on Tuesday and remains under pressure as US treasury yields surged higher and the US Dollar followed suit. 

Better than expected US consumer confidence & expectations of Biden’s stimulus plan fuelled the rally in yields 

The Federal Reserve’s monetary policy announcement later today could trigger fresh direction for the precious metal, as could Biden’s speech. 

The Fed are unlikely to rock the boar and are expected to hold steady on policy, although any comments of tapering will be closely watched. 

Where next for the Gold price? 

Gold is extending yesterday’s selloff and dropped to a weekly low of $1667 overnight but trades within a familiar range. 

It broke below the 50 EMA on the 4 hour chart and also below the ascending trendline dating back to late March. A bearish MACD supports further declines. 

Support can be seen around 1865-1863 horizontal support which has held over the past 10- days . A breakthrough here could open the door to the 200 EMA at 1759 which is also support from. 

On the upside, any recovery would need to retake the 50 EMA at 1773 before attempting to break back above the ascending trendline at 1780 and on towards the double top formation at 1797/1800 (GLD).