EUR/USD and Gold Prices Coil Around Key Technical Levels

EUR/USD and Gold Prices Coil Around Key Technical Levels

Investors adjust their positions in light of positive, negative, and to be known news, how EUR/USD and Gold traded these mixed bag updates?

The US Food and Drug Administration (FDA) would likely approve the coronavirus vaccine produced by Pfizer by mid-December as Authorities gear up for a massive inoculation campaign in the country. The EUR/USD and Gold have kept their neutral outlook.

The Market’s Worries

The vaccine’s updates improve the economic outlook of 2021 however, stocks rallied slightly amid concerns over the impact of the newly imposed lockdowns and the uncertainty over the stimulus package.

The US Treasury Secretary Steve Mnuchin requested last week from the Fed that $454 billion of some of the emergency credit facilities to be returned to the treasury. The Fed chair criticized this step as it takes away a safety net that created confidence in the market. Based on that, Republicans in the Senate may reduce the size of the second fiscal stimulus package from $1.5 Trillion to $500 billion only.

It is worth noting that, Republicans hold 50 seats in the Senate while Democrats 48 seat only however, there still a runoff for two seats in Georgia on January 5, 2021, and if Democrats win these seats the situation will change as the Democrat will have 50 seats plus the Vice-President’s vote as a President of the Senate.

Stock Market

Change %

S&P 500

- 0.1%

Dow Jones

0.0%

NASDQ

-0.4%

Japan 225

+0.9%

DAX 30

+0.5%

FTSE 100

+0.4%

CAC 40

+0.8%

EUR/USD and Main FX Markets

The US Dollar slipped by 0.1% on an improved market sentiment although, the greenback traders await the FOMC minute this week to look for any hints whether the Fed thinks to increase the open-ended QE program or prefers the wait and see approach. As such, the US Dollar could slip further in the first scenario and rally in the second. Technically, the US dollar index remains neutral while above 91.72, a close below that level changes the outlook to negative.

The EUR/USD maintained its sideways move as traders wait for more updates about the European video conference summit to discuss the Pandemic-relief and budget funds. Nonetheless, the market awaits the ECB's answer to the newly imposed lockdown in Europe. The ECB President Christen Lagarde promised an additional stimulus package and urged EU states to make pandemic relief available without delay. Technically, the pair’s outlook remains neutral while below 1.1909.

The GBP/USD hit on Monday an over two-month high at 1.3331 on news that the UK-EU free trade deal is 95% agreed and both sides are on course to avoid a cliff-edge Brexit by the end of the year. The pairs may rally for a test of 1.3460 while above 1.3185.

Gold and Oil

The oil price held gains thanks to news of a near start of the US vaccination campaign that could improve fuel demand expectations in 2021. The Brent Crude edged higher on Monday by 1.3% and rallied eying a test of $46.50 a barrel.

The Gold steadied on Friday above $1,860 as the US secretary Mnuchin signaled that negotiations on stimulus measures will continue increasing Gold’s appeal as a hedge against inflation. Technically, the precious metal maintains its neutral outlook and could rally towards $1,921/oz.

Looking Ahead

The Market will follow the Eurozone, UK, and the US PMI numbers (flash) of November at 9:15 PM (GMT), 10:30 AM, and 3:45 PM respectively, then investors will tune in the Fed member Daly will speak at 7:00 PM then the Bank of Canada member Gravelle will speak at 8:00.

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