Euro, US Dollar, Gold Move On Fed Discount Rate Decision (Analysis on EUR/USD, XAU/USD, Charts, Video)

Look what happened to the EUR/USD (Euro/US Dollar) and XAU/USD (spot Gold) after the Fed raised the discount rate. This trade is at the crossroads.  The Euro actually broke the recent lows.  I've been watching spot Gold and Euro-$FXE recently and the last few days have been choppy around the 50 day moving average, 100dma and top of a new XAU/USD downtrend channel.  First here's the carnage from a few moments ago.

Spot Gold (USD) (fxstreet.com)

EUR/USD Minute (fxstreet.com)

So now for the short-medium term view.  If you look at the weekly charts, EUR/USD clearly broke the lows and if a magical bid doesn't appear at 1.35, it could head towards 1.30-1.32 support.  I charted out the Euro Index/FXE and saw support around the same area.

With Europe's fiscal crisis putting pressure on the EURO and higher USD interest rate (on long end at least) pressures coming from a tightening bias and discount rate releases like today, the US Dollar could see more upside which could affect the long XAU/USD (spot gold priced in US Dollars) trade.  Perhaps not XAU/EUR (Gold in Euros)We'll see where money flows.  If money flows to both the US Dollar and Gold it would be a wash for XAU/USD (sideways).  Tell me if I'm off somewhere here.  Looking specifically at the weekly gold chart, is there a wave coming in the channel?  You can see the downtrend channel and 1,008 support level from March 2008 which was broken.  The 200 day moving average hits at 1,028.

EUR/USD Weekly (fxstreet.com)

Spot Gold Weekly (fxstreet.com)

For better analysis though I'll send you to Ashraf Laidi of CMC Markets and Adam Hewison of MarketClub.  Ashraf thinks the EUR/USD and Gold are heading lower and Adam Hewison at MarketClub analyzed gold using historical weekly activity.  Adam doesn't expect new highs just yet, he sees sideways action but gives a prediction on when it might move higher [free video].  Full disclosure,  I'm an affiliate of MarketClub and incentivized for recommending great trading products!  Laidi was featured on Fox Business yesterday. Thoughts?

Comments

  1. Interesting action this week, tough call on Gold vs. Dollar. Either we break out of this downtrend channel to test 1150ish or meltdown to the 200dma (1,030). Gold has been resilient on sell offs these past few days so next week will be confirmation for gold and potential USDX consolidation imho. Doing an updated post on multiple related indexes tomorrow.

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  2. New post: Large $FXE Volume, Option Trade, USDX, Golden Crosses and Sunday Action (EUR/USD, $USDX, FXE, XAU/USD, Gold Continuous Contract, GLD)

    Sunday night Gold, Euro and $USD report for 2/21/2010

    http://www.distressedvolatility.com/2010/02/large-fxe-volume-option-trade-usdx.html

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  3. if they issue bonds as selling of their debths how shall i activate my godly resources to convert them to assets for derivations of monetizing my properties trading to finance the activities and the sovereignties of individuals with my new world reserve currency called zix delivering quintupled world gdp to this civilisation in the universalization with god as the guide in unification of globe for harmonious society

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  5. this text was aimed to be sent to montenegro's dictionairy but this is universal question of the eclectic in speach and texting

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  6. I think Gold prices now are getting higher.

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  7. This is an interesting analysis of the money system. Thanks for the interesting insights.

    http://strategicdecisions.stanford.edu

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  8. There are some serious problems in Europe that could destroy the euro. Some countries are starting to fight one another for more power and because they do not agree with ideas on how to spend the European Union's money.

    ReplyDelete

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