Weekly data: EURUSD & Gold price action before major data

EURUSD, daily

This will likely be a rather volatile week for the pair since there is major data related to EUR and USD in 3 consecutive days this week with the peak on Friday where the “king” of publications the NFP is set to be released.

FOMC minutes last week confirmed that the main objective of the FED is still to curtail inflation which is still above the target rate of 2%. Job market remains strong still and unemployment remained low while participants noted that: “ in light of the lagged effects of cumulative tightening in monetary policy and the potential effects on the economy of a further tightening in credit conditions, the extent to which additional increases in the target range may be appropriate after this meeting had become less certain.”

On the technical side, the price on the chart has found resistance on the upper band of the Bollinger bands in early May and has since corrected to the downside. The 50 SMA is still trading well above the 100 SMA, indicating the overall bull movement is still strong, while the Stochastic oscillator is near its extreme oversold level possibly indicating that a bounce to the upside might be possible in the coming sessions.

All in all the area of $1.08 consists of a strong technical resistance area since it consists of an area on the chart where the 20 & 100 day moving averages almost touch and is also the psychological resistance of the round number. On the contrary the level of $1.06 is considered a great support area on the price because its made up of the 38.2% of the daily Fibonacci retracement and is also an area of reaction to the price in late February and mid March.

XAUUSD , daily

The price of gold  edged down in thin trading on Monday as progress is seen regarding the U.S. debt ceiling agreement and weighed on safer assets, while chances of the Federal Reserve raising rates higher reduced the demand for the yellow metal. According to the CME fedwatch tool the possibility of further interest rate hike has exceeded the narrative of pausing in the last week, reaching more than 65% in favor of the hike.

The pull-back in gold came as stocks rallied on the news of a debt deal being finalized in Washington, although trading ran on thinner volume with parts of Europe, Britain and the U.S on holiday.

From a technical standpoint, the price is in an overall bearish movement for the last month with a minor correction happening in early May. The 50 day moving average is trading above the 100 day moving average indicating that the overall bullish momentum is still valid despite the prolonged correction in the last month.

The Stochastic oscillator is recording extreme oversold levels further supporting the narrative of a bounce back to the bullish movement. Currently the price is trading exactly on the 100 day moving average , at the time of this report, and is crucial to monitor where the next sessions head to get an estimate of the short term trend forming.

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