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?

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