Market Alert: Levels to Watch for EUR/USD, GBP/USD, Gold

The U.S. dollar remains bullish ahead of key data; EUR/USD, GBP/USD, and gold prices face technical challenges.

Market observers brace for a pivotal event on the U.S. economic calendar next week as anticipation builds around the release of core PCE data, the Federal Reserve’s favored inflation measure. Traders brace for volatility as they anticipate the looming data release injecting volatility into the F.X. market.

Consensus estimates project a 0.4% increase in core PCE for January, marking a slight decrease in the annual rate from 2.9% to 2.7%. However, traders should exercise caution against potential surprises to the upside, resembling recent CPI and PPI reports that surpassed expectations for the same period.

Persistent inflationary pressures, coupled with robust job creation and wage growth, may compel the Fed to postpone its easing cycle until the latter half of the year, potentially leading to modest adjustments once initiated. Such a scenario could drive interest rate expectations towards a more hawkish stance.

Extended periods of higher interest rates may fuel upward momentum in U.S. Treasury yields, bolstering the U.S. dollar’s bullish trajectory observed throughout 2024. Consequently, currency pairs such as EUR/USD and GBP/USD could encounter headwinds in sustaining positive performance in the short term, while gold prices may face similar challenges.

Moving beyond fundamental analysis, we will examine the technical outlook for EUR/USD, GBP/USD, and gold prices to identify critical price levels traders should monitor for potential trading strategies in the sessions ahead.

Market Alert: Levels to Watch for EUR/USD, GBP/USD, Gold

EUR/USD Technical Analysis

EUR/USD has staged a recovery this week but has yet to fully reclaim its 200-day simple moving average, presently at 1.0830. Closely monitoring this level is advisable for traders, as a breakthrough can pave the way for a rally towards 1.0890 and beyond 1.0950.

Conversely, a rejection from current levels could signal a downward trend, with initial support at 1.0725, followed by 1.0700, and possibly extending towards 1.0650.

GBP/USD Technical Analysis

GBP/USD experienced consolidation towards the upside but fell short of surpassing its 50-day simple moving average at 1.2680. Bulls may encounter resistance at this level, though a breakout could propel prices toward trendline resistance at 1.2725.

In the event of a reversal, initial support lies around the 1.2600 mark, with further downside pressure potentially driving prices toward trendline support and the 200-day simple moving average at 1.2560.

Gold Price Technical Analysis

Gold prices saw modest gains but encountered resistance around the $2,030 mark, where a key resistance zone intersects with a downtrend line and the 50-day simple moving average. Sustained defense of this area by sellers could prevent a bullish resurgence; however, failure to do so might lead to a rally toward $2,065.

On the downside, support levels are identified at $2,005, near the 100-day simple moving average, followed by $1,990 and $1,995 in the event of further downward pressure.

As market participants brace for potential volatility before core PCE data release, strategic positioning and risk management will be paramount for traders navigating the FX and commodities markets.

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