Gold on the cusp of a major bearish breakout

New York (Nov 30)  The US dollar index rose as the market reflected on testimony by Jerome Powell and Janet Yellen. In a statement, Powell reiterated that the American economy was doing quite well. This is evidenced by the recent stream of strong numbers from the country. The unemployment rate has dropped to 4.6% while the initial jobless claims have dropped to the lowest level in more than 50 years. On Monday, data showed that the country’s pending home sales rebounded by 7% in October. Later today, the currency will react to the latest US home price index and consumer confidence data.

The euro was little changed against the US dollar as the market reflected on the strong consumer inflation numbers from Europe. On Monday, data by the German statistics agency revealed that the country’s inflation jumped by 6% in October. The same trend has been seen in other countries even as the European Central Bank (ECB) insisted that it is transitory. The currency will today react to preliminary inflation data from the Eurozone and France. Germany will also publish the latest unemployment numbers.

EUR/USD

The EURUSD pair retreated slightly during the American and Asian sessions. The pair is trading at 1.1268, which is slightly below last Friday’s high of 1.1335. On the four-hour chart, the pair is still slightly below the 23.6% Fibonacci retracement level. It has also moved to the 25-day moving average while the Relative Strength Index (RSI) has moved below the oversold level. The pair will likely resume the bullish trend as the market target the Friday high at 1.1335.

XAU/USD

The XAUUSD pair retreated as the US dollar strength continued. On the four-hour chart, the pair is trading slightly above the key support level at 1,778. This was the lowest level on November 9th. It has moved below the 25-day moving average. Also, it has declined to the 61.8% Fibonacci retracement level. The Stochastic oscillator has also dropped from the overbought level. Therefore, the pair will likely break out lower in the coming days.

FXstreet