Be very cautious about how much you put in at any one time, and only add as the trade works out for you.

• Gold markets rallied Friday to close out the week on the good foot.
• At this point, the market looks as if it is ready to go much higher, perhaps reaching the $1800 level.
• The 50-day EMA is sitting near the $1800 level, so it all comes together in order to show signs of exhaustion.

Is There Enough Momentum?

The last three days have been very strong, and therefore I think it shows that there is plenty of momentum. However, the $1800 level is a major area to get above, and I think it would take a lot of effort to clear it. The $1800 level is a major region to pay attention to, so if we were to clear the area, gold really should take.

On the other hand, if we see any signs of exhaustion between here and there, it’s probably a nice selling opportunity. Ultimately, this will come down to what we see in the interest rate markets, as the 10-year yield has fallen quite significantly over the last several days as well. A lot of this comes down to the noise coming out of the Federal Reserve meeting, which of course people continue to see as a potential pivot by the Fed. I don’t think that’s necessarily the case, and it would not take much from the Federal Reserve governors to spook the market.

Regardless, it’s the interest rates that drive where we go next. If interest rates fall, and typically is good for gold and vice versa. Regardless, I think this is a situation where you need to be cautious about your position size, as although we have a lot of momentum in one direction, gold tends to be very volatile so I would be cautious regardless as to which direction you are trading.

If we do break above the $1800 level, then I would become more of a “buy-and-hold” type of situation. At that point, the market is likely to go on the way to the $2000 level. Regardless, I think you need to be very cautious about how much you put in at any one time, and only add as the trade works out for you. If we were to somehow turn around a break below the $1680 level, that opens up some massive selling pressure to the downside.

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All things been equal, I think we pullback and then find buyers at a slightly higher level than we did last time.

Gold markets rallied quite significantly during the trading session on Thursday as yields in America fell. That being said, they were due for a bit of a pullback so it does make sense that gold gets a bit of a boost. Whether or not this has legs is a completely different question, because we are in an area where we have seen quite a bit of noisy behavior previously. The 200 day EMA sits just above, so that of course will attract quite a bit of attention in and of itself.

If we were to break above the 200 day EMA, then I might be convinced that we could continue to rally, but I think we are more likely than not to see a lot of back and forth momentum, thereby trying to build a longer-term base. Building a base takes a while, so you should keep in the back of your mind that even if this does end up being very bullish for gold, it may take a while for it to really take off. After all, there has been a lot of selling as of late, and therefore there is quite a bit of work to do by those who would be bullish.

Underneath, the $1800 level looks to be offering support, and thereby gives the market a bit of a reference point. As long as we can stay above $1800, we still have the possibility of a “buy the dips mentality”, but that would be on short-term charts until the market proved itself. The 10 year yield continues to be something you need to watch quite closely, because it has an inverse correlation to this market. As yields go up, gold goes down and vice versa.

If we do clear the 200 day EMA, then it is likely that a lot of buyers will jump in and try to drive gold to the $2000 level over the longer term. It obviously would have a lot of work to do to get there, and in the environment that we find ourselves in currently, it would not be surprising at all to see nothing but chop being back and forth, which is the market’s way of punishing everyone at the same time. All things been equal, I think we pullback and then find buyers at a slightly higher level than we did last time.

The pair will likely keep falling in the coming days as the dollar strength continues. The next key support level will be at 1.0700.

Bearish View

• Sell the EUR/USD pair and set a take-profit at 1.0700.
• Add a stop-loss at 1.0850.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.0835 and a take-profit at 1.0925.
• Add a stop-loss at 1.0750.

The EUR/USD pair is hovering near its lowest level since 2020 after the strong US housing data and the IMF warning about the global economy. It is trading at 1.0800, which is substantially lower than last week high of 1.0923.

IMF Warning On the Global Economy

The International Monetary Fund (IMF) delivered a major warning about the global economy on Tuesday. The agency said that the ongoing crisis in Ukraine will lead to a substantial slowdown of the global economy this year. It expects the economy will grow by 3.6% this year., down by 0.8% from its previous guidance in January.

The IMF also warned that European economies were substantially vulnerable especially if they decide to place an embargo on Russian oil and gas. The countries have announced that they are considering blocking Russian oil in a bid to punish the country.

At the same time, the agency warned that inflation will remain high in the coming months as the cost of most items remains stubbornly high. Data published last week showed that the American consumer inflation jumped to the highest level in over 40 years. Investors also expect the upcoming inflation data from the European Union rose to the highest point in decades in March.

The EUR/USD reacted mildly to the latest housing starts and building permits data. The numbers revealed that the country’s building permits rose from 1.86 million in February to 1.87 million in March. In the same period, housing starts rose from 1.788 million to 1.79 million.

The pair declined as American bond yields continued rising. The 10-year yield jumped to 1.29% while the 30-year rose to 3% for the first time in years. This performance is because investors expect that the Federal Reserve will move faster than expected. The EU will publish the latest industrial production data.

EUR/USD Forecast

The EUR/USD pair has been in a strong bearish trend in the past few days. It is now trading at 1.0800, which was the lowest level on March 7th. It has moved below the 25-day and 50-day moving averages. It has also formed what looks like an inverted cup and handle pattern and is slightly above the key support level at 1.0758, which was the lowest level this year.

Therefore, the pair will likely keep falling in the coming days as the dollar strength continues. The next key support level will be at 1.0700.