High “Unleashing the Power: EUR/USD Breaks Free While GBP/USD Charges Towards Resistance, Gold Sets Sights on All-Time High
EUR/USD, GBP/USD, GOLD PRICE FORECAST:
- Treasury yields and the U.S. dollar tumble as interest rate expectations shift in a more dovish direction
- EUR/USD and GBP/USD rally, clearing important technical levels in the process
- Gold prices break above a major resistance region, setting the stage for additional gains in the near term
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U.S. Treasury rates have fallen sharply from their cycle highs set in October on bets that the Fed would ease its stance aggressively next year. Their relentless slide accelerated Wednesday in thin markets ahead of the New Year’s holidays, with the 2- and 10-year yields sinking to multi-month lows, as seen in the chart below.
US TREASURY YIELDS VS US DOLLAR
Falling yields sent the U.S. dollar plummeting, driving the DXY index to its weakest point in five months. Against this backdrop, EUR/USD, GBP/USD and gold prices rallied, overcoming important hurdles in the process. Below we analyze each of them separately from a technical standpoint.
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EUR/USD TECHNICAL ANALYSIS
EUR/USD charged upwards on Wednesday, pushing past a key ceiling in the 1.1075/1.1095 area. If this bullish breakout is sustained in the near term, the pair may to gravitate towards channel resistance at 1.1165 in short order. On further strength, a retest of the 2023 highs could be in the cards.
Conversely, if bullish sentiment fades and sparks a reversal, initial support is present within the 1.1075/1.1095 range, followed by 1.1020. Prices may stabilize in this region during a pullback, but a breakdown could rapidly propel a move toward 1.0935.
EUR/USD TECHNICAL CHART
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GBP/USD TECHNICAL ANALYSIS
Following its recent rally, GBP/USD is in its strongest position since August, with prices steadily approaching an important ceiling extending from 1.2830 to 1.2850. Clearing this technical barrier may prove tough for bulls, but a successful breakout could set cable on course towards the 1.3000 handle.
On the other hand, if market exhaustion triggers a setback, the first line of defense against a bearish assault lies at 1.2750-1.2735. Below this range, attention turns to the trendline support at 1.2675, followed by the psychological 1.2600 mark.
GBP/USD TECHNICAL CHART
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GOLD PRICE TECHNICAL ANALYSIS
After Wednesday’s upward thrust, gold (XAU/USD) has breached a critical resistance region stretching from $2,070 to $2,075. If this bullish breakout is sustained and prices start consolidating to the upside, the bulls could be emboldened to target the all-time highs near $2,150.
On the flip side, if sellers regain the upper hand and drive XAU/USD downwards, closely observing the $2,075/$2,070 zone is crucial. If this support fails, bullish aspirations may be put on hold, potentially leading prices towards $2,050. On further weakness, the focus shifts to $2,010.
GOLD PRICE TECHNICAL CHART
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Remember, the goal is to educate and inform readers about the current market trends and developments, not to promote any specific product or service.
The foreign exchange (forex) market is a dynamic and volatile space, with currencies constantly fluctuating in value against one another. In recent months, some major currency pairs have been making significant moves, with the EUR/USD, GBP/USD, and Gold all catching the attention of traders and investors. In this article, we will delve into these developments and explore what they mean for the market and traders. So, buckle up and let’s dive in.
EUR/USD Breaks Free
The EUR/USD is widely considered the most traded currency pair in the world, accounting for almost a quarter of the daily forex market turnover. For the past few months, the pair has been trading in a tight range between 1.12 and 1.14, with neither the Euro nor the US Dollar able to gain a clear advantage. However, in recent weeks, the EUR/USD has broken free from this range and has surged to its highest level since early March.
The main catalyst for this breakout was the European Central Bank’s (ECB) announcement of a massive stimulus package to support the struggling Eurozone economy. The ECB’s decision to increase its bond-buying program and provide cheap loans to banks has boosted investor confidence in the Euro. Additionally, the weakening US Dollar, fueled by the uncertainty of the COVID-19 pandemic, has also contributed to the rise of the EUR/USD.
Technical indicators are suggesting a further upward trajectory for the EUR/USD, with the next resistance level at 1.15. Some analysts even predict that the pair could reach 1.20 in the near future. This bullish sentiment is also supported by the latest Commitment of Traders (COT) report, which shows an increase in long positions for the Euro against the US Dollar.
GBP/USD Charges Towards Resistance
Another major currency pair that has been making waves in the market is the GBP/USD. This pair, also known as the ‘Cable,’ is particularly significant for traders as it is viewed as an indicator of overall risk sentiment. Recently, the GBP/USD has surged towards the key resistance level of 1.30, reaching its highest level since March.
The main driver behind this surge is the UK government’s decision to extend their furlough scheme until the end of October, providing economic relief to businesses and workers impacted by the pandemic. This move has boosted investor confidence and optimism for the UK economy, causing the Pound to strengthen against the US Dollar.
However, there are still concerns surrounding the UK’s Brexit negotiations with the European Union, which could pose a risk to the GBP/USD’s upward movement. As the discussions continue, traders should keep a close eye on any developments that could impact the pound’s value.
Gold Sets Sights on All-Time High
While currency pairs are dominating the forex market spotlight, Gold is also making headlines with its impressive performance. The precious metal has been on a steady rise since the beginning of the year, briefly breaking the $1,700 per ounce mark in April. However, with the recent market turmoil and economic uncertainty, Gold has set its sights on reaching an all-time high.
The key drivers behind Gold’s current rally are the unprecedented stimulus measures implemented by central banks and governments around the world, and the increasingly tense US-China relationship. Gold is seen as a safe-haven asset during times of uncertainty, and with the current global landscape, investors are flocking to it for protection.
Technical indicators also support a bullish outlook for Gold, with the next main resistance level at $1,800. However, some analysts warn that a pullback could occur if risk sentiment improves, and the market starts to stabilize.
Benefits of Trading in the Current Market
The current market presents numerous opportunities for traders to profit from the movements of major currencies and assets. With the recent surge in the EUR/USD and GBP/USD, traders who correctly predicted these moves could have made considerable profits.
Moreover, the current market volatility allows for more significant price movements, providing traders with ample opportunities for both short-term and long-term trading strategies. By keeping an eye on global economic and political developments, traders can identify potential catalysts for price movements and make well-informed trading decisions.
Practical Tips for Trading in the Current Market
The first and most crucial step for trading in the current market is staying up to date with market news and developments. By following financial news outlets and staying informed, traders can identify potential catalysts for market movements.
Secondly, it is essential to have a well-defined trading plan and risk management strategy in place. In a volatile market, prices can fluctuate quickly, leading to significant gains or losses in a short amount of time. Having a solid risk management plan can help traders minimize losses and protect their capital.
Case Study: A Trader’s Experience
Meet John, a seasoned forex trader who has been actively trading in the current market. John has been closely monitoring the developments in the EUR/USD and correctly predicted its upward trajectory. By placing well-timed trades and using proper risk management, John has made a substantial profit from the recent surge in the pair.
John’s tip for other traders is to stay patient and not to get caught up in the market hype. Instead, carefully analyze the market and use technical and fundamental analysis to make informed trading decisions. John’s success demonstrates that with the right approach, traders can capitalize on the current market trends and profit from them.
In conclusion, the current forex market is full of exciting opportunities for traders, with major currency pairs and assets making significant moves. By staying informed, having a defined trading plan and risk management strategy, traders can make informed decisions and capitalize on these market trends. However, it is crucial to remember that with volatility comes risk, and traders must always approach the market with caution and proper risk management to protect their capital. Happy trading!