GOLD reaches new all-time highs amid widespread falls in interest rates and with all eyes set on this week's meeting of the Federal Reserve in which an increase in the dovish tone is expected.
The precious metal is heading towards its next psychological level of $2,000.
From a purely technical perspective, there are no reference levels at this point, so it finds no obstacle or resistance in its upward movement.
Some analysts are already talking about levels above $2,000 as the conditions for this rally increase; that is, interest rates are falling for an indefinite period, and the US Dollar is depreciating.
To this must be added the still not resolved uncertainty about the evolution of the pandemic in the world. The United States is still unable to stop its expansion; in Europe, there is talk of a second wave of outbreaks, and areas like South America are out of control.
The US Dollar accelerates its decline in this scenario. DollarIndex is in a lows zone not seen since 2018, around 93.60, where it finds an intermediate support level.
This gets reflected in the price of EUR/USD and USD/JPY.
EUR/USD has been trading at 1.1764, which is very close to its primary target at 1.1820, and 50% Fibonacci retracement of the entire bearish leg started in February 2018.
As the spectacular advance continues in this pair with more than 20 consecutive days of non-stop hike, the level of overbought increases. This is reflected in the long positioning of the market that is currently at the highest levels in recent years.
Therefore, it is reasonable to think that consolidation movements or corrections will occur close to their objective levels without losing the upward trend that some investment banks place in the 1.20-1.22 area as the fair value of the Euro against the Dollar.
USD/JPY, from a technical point of view, still has room for further declines. Once its support is drilled in the 106 area, the pair heads towards a first intermediate support area at 104.50.
Below which the downward target would be at 103.00. If the Federal Reserve's bearish bias is confirmed at its next meeting, on Thursday this week, the downward movement could accelerate.
Another factor that could influence this price action is the lack of risk appetite in the market, which is reflected in the indecisive changes and without bullish continuity of the stock indices and in the rise in fixed income assets, mainly treasuries, because of capital flows seeking refuge.