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Gold Rate and GBP/USD Face Key Resistance Levels

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
Stock markets returned to upbeat mode as the US legislators near closing a deal this week, while EUR/USD traders’ eyes will be focused on the Fed meeting updates.

A promising Invitation       

 

Stock markets closed in the green on Tuesday on optimism over a possible approval of the long-waited stimulus package. The US house speaker Nancy Pelosi invited top republicans to meet on Tuesday to close a water-downed deal of $748 billion and pass it this week. On the other hand, the Republican Majority leader in the Senate Mitch McConnell said he would keep the senators in Washington until passing the deal.

 

McConnell congratulated for the first-time recognized Joe Biden as President-elect in a blow to President Trump’s desperate effort to flip the election’s results, providing more certainty to the market about the US political stability.

 

  Stock Market

Change %

S&P 500

+1.0%

Dow Jones

+0.8%

NASDQ

+0.9%

Japan 225

+0.6%

DAX 30

+1.4%

FTSE 100

+0.3%

CAC 40

+0.6%

Table source: CAPEX WebTrader


EUR/USD and Main FX Markets 

The EUR/USD traders monitor the FOMC meeting on Wednesday to find out whether the central bank will modify its monetary policy. The Fed may retain a dovish tone and emphasize the need for ongoing fiscal aid, and with near-zero interest rates and loose financial conditions, there is little more the central bank can do.

Technically, the Relative Strength Index (RSI) on the daily chart remained flat above 60 highlighting a stalled bullish momentum. The price develops a possible double top pattern and a break below the neckline at 1.2057 could send the price even lower towards 1.1940

Optimism for a trade deal on Brexit boosted the GBP/USD and led the pair towards the high end of the current trading zone 1.3185 – 1.3460 a daily close above that level may cause a rally towards the monthly resistance at 1.3710 (Feb 2018 low).

Gold and Oil 

The oil price was boosted on Tuesday by the US fiscal deal optimism yet worries of a surprise rise in the US oil stockpiles slowed down the price rally on Wednesday. The price/RSI negative divergence on the Brent Crude signals a possible reversal of the current bullish momentum therefore, a close below the low end of the current trading zone $50.50 - $54.28 could send the price even lower towards the weekly support level at $46.51 (the August 2020 high).

The Gold price U-turned and rallied on Tuesday eyeing a test of the high end of the current trading zone $1,796 - $1,861. A close above that level could extend the rally towards the weekly resistance level at $1,921 (October 6 high).

Looking Ahead

On the economic calendar, markets expect the Eurozone composite PMI flash number of December at 10:00 AM (GMT), the UK composite flash number of December at 10:30 AM, the Canadian inflation numbers of November with the US retail sales of November at 2:30 PM, the US Manufacturing PMI flash numbers of December at 3:45 PM, the US Fed rate decision at 8:00 PM and the Fed president press conference at 8:30 PM. 

Sources: Bloomberg, Reuters, CNN

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.