EUR/USD and gold price prediction
- gold price and euro/usd Potential to gain momentum in the short term, but broader trends may depend on upcoming U.S. economic data
- All eyes will be on ISM services PMI and US labor market report later this week
- This article describes XAU/.USD and EURKey levels of /USD to watch in the coming days
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Most read: The Fed remains unchanged and continues its bias to raise interest rates.Limited volatility in presentation of gold and USD
The Federal Reserve today concluded its penultimate meeting of 2023. As expected, the Federal Reserve, led by Jerome Powell, decided to keep the benchmark interest rate unchanged at its current range of 5.25% to 5.50%. In terms of forward guidance, the central bank stuck to its scenario and kept the door open for further policy tightening in case a more restrictive stance is needed in the future to contain inflation.
Despite the FOMC’s tightening bias, Powell has been unable to steer market prices toward another rate hike, as he has done in the past when economic conditions warranted a more aggressive stance. Although his press conference contained hawkish elements, there was no strong belief in the need to continue raising borrowing costs, suggesting the normalization cycle may already be over. .
Policymakers appear to be more cautious, perhaps recognizing that the full effects of past actions are not yet being felt, and the US dollar could soon hit a ceiling. However, confidence in this assessment will require further data to confirm that the outlook is rapidly deteriorating given increasingly restrictive financial conditions.
Later this week, traders will have a chance to gauge the overall health of the economy with the release of the ISM Services PMI survey and October US employment data. If both reports predict a significant downside, as was the case for the ISM manufacturing index, there could be room for a significant decline in the USD. This scenario will push EUR/USD and gold prices (XAU/USD) higher.
Upcoming US Economic Report
sauce: DailyFX Economic Calendar
EUR/USD technical analysis
EUR/USD was on a gradual downtrend on Wednesday, but it bounced back from the support of the medium-term trend line and reversed. Despite the recent price action, the underlying bias remains bearish, but the bears need to push the price below 1.0535 to be convinced that losses will accelerate. If this scenario plays out, we could see a move towards the 1.0500 handle. If it falls further, the focus will shift to 1.0355.
On the contrary, if the bulls manage to regain momentum and decisively increase the exchange rate, the first resistance level lies between 1.0670 and 1.0695. Clearing this technical ceiling to the upside could reignite the upward momentum and pave the way for a rally towards 1.0765, the 38.2% Fibonacci retracement of the July-October decline.
Curious about the likely path of EUR/USD and which market catalysts to watch? Learn more in our Q4 Euro Trading Forecast. Download now!
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EUR/USD technical chart
EUR/USD chart created using TradingView
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Gold price (XAU/USD) technical analysis
Gold (last month futures) has rebounded sharply from the October lows but is struggling to break out of the resistance in the $2,010/$2,015 range. In recent weeks, every attempt to break out of this area has been met with a downside rejection, indicating that the bulls are not mustering the necessary strength to cause a breakout.
To gain insight into the short-term outlook for XAU/USD, it is essential to consider two potential scenarios and monitor how the price moves in the coming trading sessions.
Scenario 1: If the yellow metal can overcome the $2,010/$2,015 barrier, the bullish momentum could accelerate and create the right conditions for a rally towards last year’s highs near $2,085.
Scenario 2: If sellers orchestrate a strong reversal and push gold prices below support at $1,980, losses could accelerate and pave the way for a potential test of the 200-day simple moving average at $1,945. Below this threshold, all eyes will be on $1,920.
