The pair will likely continue pulling back as sellers target the key support at 1.0150. 

Bearish View

• Sell the EUR/USD pair and set a take-profit at 1.0175.
• Add a stop-loss at 1.0366.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.0300 and a take-profit at 1.0400.
• Add a stop-loss at 1.0250.

The EUR/USD price pulled back to a low of 1.0254, ahead of the upcoming economic numbers from the United States and Europe. The price is about 1% below the highest level this month. The price is at the lowest level since August 10th.

US Retail Sales and EU GDP Data

The EUR/USD price rose sharply last week after the US published significantly lower consumer and producer inflation data. According to the Bureau of Labor Statistics (BLS), the headline consumer inflation dropped from 9.1% in June to 8.7% in July. That decline was slightly lower than what most analysts were expecting.

On the following day, the BLS showed that the country’s producer price index (PPI) dropped for the first time since early in the pandemic. It eased to 9.8% in July as the price of gasoline declined. The pair then started dropping as Fed officials like Mary Daly, Charles Evans, and Neel Kashkari insisted that the bank will continue hiking rates.

The EUR/USD pair will react to several important economic data this week. On Tuesday, the US will publish the latest building permits and housing starts numbers. Economists expect the data to show that building permits dropped from 1.696 million and 1.540 million, respectively.

These numbers will be followed by the latest estimate of European GDP numbers. Economists expect the data to show that the economy expanded by 0.7% on a quarter-on-quarter basis and by 4.0% on a YoY basis. With the bloc facing significant energy challenges, there is a likelihood that it will sink to a recession this year.

The pair will next react to the latest US retail sales and Fed minutes that are scheduled for Wednesday. The minutes will provide more details about what the Fed officials deliberated. The EUR/USD pair will react to the latest EU inflation data and the US existing home sales data.

EUR/USD Forecast

The EUR/USD price rose to a high of 1.0366 last week. This was a notable level since it was the lowest level in May and June of this year. It has then pulled back slightly and moved slightly below the 25-day and 50-day moving averages. The current price is slightly above the ascending trendline shown in purple.

The pair will likely continue pulling back as sellers target the key support at 1.0150. More upside will only be confirmed if the pair moves above the resistance at 1.0366.

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The price of gold fell sharply as Treasury yields rose and investors weighed a possible cancellation of some US tariffs on Chinese consumer goods that could help ease inflation. Accordingly, the gold price fell amid strong selling to the support level of $1,763 an ounce in early trading today, Wednesday, the lowest price for gold throughout the year 2022 trading.

People familiar with the deliberations said US President Joe Biden may announce a rollback of some tariffs as soon as this week, although the timing may be delayed and the final decision is made. It would be Biden’s first major policy move on trade relations with China and appears aimed at curbing inflation, which has driven up interest rates and reduced the allure of zero-interest gold. In this regard, Chinese Vice Premier Liu He discussed the US tariffs in a phone call with Treasury Secretary Janet Yellen.

In general, the price of the yellow metal, XAU/USD, declined over the past three months due to higher interest rates, but it managed to hold above $1800 an ounce amid fears of a recession that may enhance its attractiveness as a safe haven. However, prices formed a so-called death cross pattern – when the 50-day moving average drops below its 200-day counterpart – which is a bearish signal for some traders.

Today, the US Federal Reserve’s latest meeting minutes will be analyzed for clues to the Fed’s narrow path and whether it is likely to raise US interest rates by 50 or 75 basis points at its July 26-27 meeting. Therefore, investors are likely to remain on the sidelines until the release of the Federal Reserve’s meeting minutes, non-farm payrolls and US unemployment data due on Friday.

According to the experts. If the Biden administration scraps some Trump-era tariffs on Chinese goods, it will certainly be good news for consumers and inflation. This could mean that the Fed won’t need to do much to rein in inflation if this is passed, and it will be good for gold.

There is no doubt that the XAU/USD gold price breaching the $1775 support level supports the bears’ control over the general trend of the yellow metal. As I mentioned before, the $1800 level remained for a long time an important barrier for both bears and bulls to control the trend. After the recent performance, and if prices move towards the support levels of 1760 and 1745 dollars, respectively, the technical indicators will move towards oversold levels, and accordingly, gold investors may think of seizing opportunities to buy gold again.

The return of the XAU/USD gold price stability above the psychological resistance of 1800 dollars an ounce is still important for the gold bulls to launch higher again. The events of today and next Friday are very important to determine the path of the gold price in the coming days, and accordingly I expect movements in narrow ranges until the reaction to these events. Overall I still prefer buying gold from every bearish level.

The price of gold extended its longest stretch of its weekly losses this year as investors look to higher Treasury yields and a stronger US dollar ahead of a flurry of inflation numbers expected from major economies in the coming days. At the beginning of this week’s trading, the price of gold fell to the level of 1852 dollars an ounce, losing about 30 dollars from the price of an ounce. It settled around this level at the beginning of trading today, Tuesday, waiting for factors to rebound higher or continue to correct towards the psychological support of 1800 dollars an ounce.

The price of the yellow metal is retreating from a weekly gain of 0.3%, bringing its year-to-date gains to around 2%. As for the price of silver, the sister commodity to gold, it trimmed some of its losses. Silver futures for June fell to $22.12 an ounce. The price of the white metal fell by 2.47% last week, which increased its decline since the beginning of the year 2022 to date by more than 5%.

Bullion prices have fallen since mid-April as the US Federal Reserve and other global central banks tighten policy to fight rising consumer prices. Monetary pressure has pushed yields on US government bonds above 3% and fueled the dollar for five weeks of gains, making gold less attractive.

There could be more volatility in the bond market as a slew of inflation data feeds the discussion about price pressures and monetary policy. US consumer prices will be released on Wednesday, with China, India, Mexico, and Brazil all reporting during the same week.

Investors also digested trade data from China on Monday that showed the damage from the Covid-19 shutdown in the world’s second-largest economy. The country’s exports and imports struggled in April as a worsening virus outbreak slashed demand, undermined production, and disrupted logistics. Commenting on this, Ravindra Rao, Head of Commodity Research at Kotak Securities Ltd. The downside is limited by rising concerns regarding China, inflationary concerns, and tensions over Russia’s war on Ukraine.

Has inflation peaked? Goldman Sachs believes, as chief economist Jan Hatzius has written, that multiple signs point to a deceleration in key inflation measures. “For the first time since price hikes began in early 2021, we revised our baseline forecast for the end of 2022 to reduce personal consumption expenditures,” Goldman Sachs analysts wrote to clients. We are now more confident that both core and core inflation have peaked on an annual basis.”

This can create an intriguing atmosphere for gold. On the other hand, slowing inflation will not look attractive to safe haven assets like gold. Slowing inflation may force the Fed to be less aggressive, allowing the central bank to remain accommodative compared to other periods historically.

In other metals markets, copper futures fell to $4.172 a pound. Platinum futures fell to $933.80 an ounce. Futures contracts for palladium fell to 2021.50 dollars an ounce.

According to the technical analysis of gold: On the daily chart below, it seems clear that the price of gold is moving freely within a bearish channel. Breaking the support of $1835 an ounce is important for a stronger control of the bears, because with it the opportunity to move will increase to break the psychological support of $1800 an ounce. Despite that, I still prefer buying gold from every descending level. Global geopolitical tensions, the impact of a new outbreak of the epidemic, and the continuation of the Russian-Ukrainian war are factors that support the gold market, which is facing a wave of interest rate hikes by global central banks led by the United States.

On the upside, the resistance levels are 1878 and 1900 dollars for the return of the bulls’ stronger control over the gold market.

Gold futures are struggling to stay in positive territory despite a stronger US dollar and higher Treasury yields. Despite swinging back and forth, gold prices are still on track to post tepid weekly gains. With the possibility of US inflation rising to 8% this next week, and the continuing war in Ukraine, the price of gold tested the level of $ 1950 an ounce today, and last week gold prices recorded a weekly gain of 0.4%, in addition to its 2022 annual gain to date, which is close to 6%.

As for the price of silver, the sister commodity of gold, it is trying to stay above $24.50. Overall, the price of the white metal fell about 0.7% last week, but it is still up more than 5% so far this year. In the end, gold has been trading relatively neutrally lately, despite the huge volatility across the global financial markets.

Commenting on the performance of the gold market, Craig Erlam, chief market analyst at Oanda, said in a research note, “Gold is trading around the same level it was yesterday, the day before that, the day before that, and so on, despite a sharp rise in volatility in places around the world. This is another result of the Fed’s hawkish shift, as gold was not affected. “We continue to see a consolidation in the price of the yellow metal, with the daily ranges tightening rather than widening as I expected,” the analyst added. “There are multiple forces at play here, but traders seem to be sticking with the traditional safe-haven inflation hedge.”

Last week, the minutes of last month’s Federal Open Market Committee (FOMC) meeting revealed that the Federal Reserve is preparing to be more aggressive in tightening monetary policy. The central bank plans to raise US interest rates beyond 25 basis points and shrink the balance sheet by $95 billion per month. Concerns are also rising about the strength of the economy. With the Federal Reserve poised to aggressively raise interest rates, the fear is that it will hit the brakes too hard or too quickly and push the US economy into recession. While that’s not the consensus on Wall Street, Deutsche Bank economists earlier said they expect a recession in the US by late next year.

The war in Ukraine has made matters even more uncertain by threatening to exacerbate inflation and damage the global economy. Oil, gas, and food prices have been particularly volatile since Russia invaded the country.

The price of gold is usually sensitive in a price environment because it increases the opportunity cost of holding non-return bullion.

The US dollar has seen a great performance over the past few days. The US dollar index (DXY), a measure of the performance of the US dollar against a basket of other major currencies, rose to 100.05, and accordingly the US dollar recorded a weekly rise of about 1.4%, which raises its rise since the start of the year 2022 to date to more than 4%. In general, a stronger profit is bad for dollar-denominated commodities because it makes them more expensive to buy for foreign investors.

Relative to the prices of other metals, copper futures rose to $4.73 a pound. Palladium futures rose to $2,410.50 an ounce. Platinum futures rose to $968.10 an ounce.

According to the technical analysis of gold: Every time that the price of gold tries to rise strongly, taking advantage of the continuation of global geopolitical tensions, it collides with the strength of the US dollar. This time the price of gold rose to the level of 1950 dollars an ounce, and we recommended last week to sell gold from that top with a target of support 1900 dollars for an ounce. It seems, according to the performance on the daily chart, that the price of gold may experience a price explosion in one of the two directions due to moving in narrow ranges for a long time recently.

According to the performance on the daily chart, the $1880 support will remain an important psychological point for a stronger and continuous control of the bears on the trend. At the same time, I still prefer buying gold from every descending level. On the other hand, bulls’ attempt to break the resistance of 1975 dollars over the same time period will support expectations of the near test of the historical psychological peak of 2000 dollars an ounce.