Dollar Weakness and Uncertainty Elevate Gold; EURUSD Looking for 1.10

Despite gold’s move on Monday, price action still remains stagnant.

Bullion.Directory precious metals analysis 28 April, 2015
By Christopher Lemieux
Senior Analyst at Bullion.Directory; Twitter @Lemieux_26

The FOMC minutes report will be out tomorrow, and there is no indication that anything dramatically different will be included. It is expected that the Fed will continue to walk the thin line of monetary accommodation and stating that a rate hike could happen at anytime. The key objective for the Fed is to keep the dollar somewhat capped, and hopefully, prevent equities from any substantial pullback.

Yesterday, gold had its best day in three months, bouncing from $1,174 to close the day above $1,200 per toz. Traders remain on the fence the rate hike situation, and that drives gold higher, even if it is in the myopic sense.

Price action is trending above $1,200, but the language out of the FOMC could likely cause gold to trend in either direction. If the Fed continues to foster the idea that a rate hike is still in the near-term, the dollar could rebound thus causing gold to trend lower. However, if the Fed focuses on the poor economic data and the impact of a higher dollar, gold could attempt higher levels of resistance.

Gold is still range bound, and no significant moves above key resistance levels have been established. XAUUSD four-hour chart shows that $1,209 and $1,222 are the next levels of resistance. Price action has been able, so far, to stay above the large downtrend created in January.

There is also EMA activity that looks promising and could provide a boost to prices. The 20-EMA will attempt to cross the 50-, 72-, and 200-EMA, which are stacked in order. If the near-term trend changes, prices could slide down January’s downtrend and test $1,190.

The EURUSD has been fighting the parity trade, so far, as it moves alongside gold. The euro has also been range bound when pegged to the dollar. Currently above 1.09, the EURUSD is very likely to challenge 1.10.  Anything above that is subject to the dollar’s reaction to tomorrow’s minutes.

1.10 on $EURUSD is something to look out for https://t.co/wbPAgGjEGS

— Chris Lemieux (@Lemieux_26) April 27, 2015

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