The EURUSD is trading at 1.2935 after consolidating in the 1.2900-1.2950 range, as seen in the M5 chart. European economic weakness and a near zero interest rate environment have weighed on the EURUSD. Further to Euro weakness we are seeing US strength both in recent GDP growth and expectations for interest rate hikes by the US Fed sooner than later. And certainly Interest Rate Futures Markets have the Fed raising rates far before the ECB, this has underpinned the recent US Dollar strength.
US benchmark stock indices rose yesterday with the Dow Jones Industrial Average (DJIA) and the S&P500 rising of 0.35%. European benchmark stock indices continued falling for a 4th consecutive session, although European markets are up at this early stage this morning for the first day in 5th. The EURUSD is still trading below the downtrend channel and the longer term outlook still appears bearish for the pair. Coming up later are the US Unemployment Claims which may impact upon the pair. Support areas include 1.2867, 1.2800, 1.2745 followed by a key support at 1.2550. Resistance levels above are at 1.2959, 1.30 figure level, followed by 1.3165.
The AUDUSD has slumped in recent days declining almost 3.5% in just 3 trading days. After trading as high as 0.9400 on Friday the pair has declined as low as 0.9112 and has now recovered up to 0.9155. Overnight we reached as high as 0.9215 following better than expected Employment data for the Australian economy.
Employment Change printed at 121,000 jobs added to the AUD economy last month, this number was far in excess of forecasts and also helped the Unemployment Rate decline from 6.3% to 6.1%, again exceeding expectations. In recent weeks RBA Governor Stevens has tried to talk down the value of the AUD by stating that the currency is overvalued and is hurting Australian economic growth. In spite of this the RBA kept rates unchanged at 2.5% which attracts capital and AUD buyers due to the interest rate differential between Australia and other developed economies including US,UK,EU and Switzerland where rate are close to zero. Support levels for the pair include 0.90, 0.89, 0.88, 0.8650. Resistance levels seen at 0.9220, 0.9315 and 0.94.
AUDUSD Hourly Chart
Gold has fallen sharply this week, declining from as high as $1300 to fall to a low of $1244. Now the price is just under $1250 an ounce. On the 10th of July 2014 the price was $100 higher at $1345 an ounce, and on the 1st of Jan XAUUSD opened the year at $1405. So it is down 10% on the year so far. US Dollar strength has helped push Gold lower, as well as the increased confidence in the US economy, which causes fewer investors to seek a safe haven in Gold, thus diminishing the demand and value for and of Gold.
Beware that Gold is down 30% from its highs of $1920 in 2011 and may be overdue for a significant upside correction and increased volatility. Despite this the current bias and trend are down and the instruments needs to be continually monitored for clues as to future price movements. Factors that can affect the pair in the medium term are: Interest rate changes, political and economic stability or instability, Russia-Ukraine conflict, Middle East tensions, economic growth in Europe, US, Asia. Support levels for Gold can be seen at $1215, $1185, $1150, $1050 and lower at $1000 an ounce. Resistance to the upside at $1275, $1300, $1350, $1400.