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Week in review: All that glitters is Gold

Week in review: All that glitters is Gold

Global equities began the week on the back foot as rising coronavirus cases in the United States and Central Asian countries dampened risk sentiment.

EU leaders struggling to agree on their pandemic emergency fund, geopolitical tensions and Brexit negotiations added to the negative list of themes draining investor confidence at the start of the week.

On Tuesday morning, we discussed the possibility of the EURUSD hitting a fresh 2020 high above 1.1495. This call was made reality less than 12 hours after thanks to a broadly weaker Dollar and European leaders surprising markets by agreeing on an unprecedented stimulus package worth €750 billion.

Week in review: All that glitters is Gold

The British Pound was under the spotlight as Brexit talks resumed after the previous disappointment. Given how Michel Barnier has stated that a Brexit deal will be unlikely by the end of 2020, the Pound could be instore for more punishment down the road.

Week in review: All that glitters is Gold

Better than expected second quarter earnings from US tech giants elevated global sentiment mid-week with stocks in Asia, Europe and US powering higher.

There was no love for the Dollar this week as the worldwide race for a coronavirus gained momentum and fiscal stimulus boosted global sentiment. In our mid-week technical outlook, we discussed the possibility of the Dollar Index (DXY) sinking towards 97.40 and lower. The DXY is trading around 97.50 as of writing.

The major talking point across markets was Gold which charged to fresh 9 years highs near $1900! Gold has appreciated 6% this week and over 25% since the start of 2020. Deteriorating US-China relations, a broadly weaker Dollar, negative real yields and darkening US economic outlook may propel the precious metal to fresh all-time highs above $1920.80.

Week in review: All that glitters is Gold

Dollar depressed and unloved

The Dollar was battered by every single G10 currency this week with the DXY breaking below the 94.70 support level. Prices are trading below the 20 Simple Moving Average while the MACD trades to the downside. If this bearish momentum rolls over into the new week, prices could test 94.00.

Dollar depressed and unloved

USDJPY sinks like a brick

Over the past 24 hours, the USDJPY has tumbled almost 140 pips. This currency is under intense pressure on the daily charts with prices trading marginally below 105.90 as of writing. A weekly close below this level may open a path towards 105.00.

USDJPY sinks like a brick

USDCAD balances above 1.3350

A weaker Dollar has dragged the USDCAD towards the 1.3350 support level. If prices are able to secure a weekly close below this support, the next key level of interest will be found at 1.3200.

USDCAD balances above 1.3350

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


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