Two Trades To Watch: Gold, EUR/GBP

Technical analysis of Forex market

Gold moves cautiously higher ahead of US NFP

Gold is moving higher, picking up from a 4 week low ahead of the US non-farm payroll.

There are plenty of mixed headlines for gold traders to digest from the fears surrounding the spread Omicron, to the more hawkish Fed and news that the US government has avoided another shut down.

The US economic calendar is full – factory orders, ISM services and Markit composite PMI are all due. However, the central focus will be the non-farm payroll. A strong print could pave the way for the Fed to move sooner on interest rates which could hurt demand for the precious metal/

Expectations are for 550k new jobs to be added in November, up from 531k in October. Unemployment is expected to tick lower to 4.5%.

Where next for Gold?

Gold has been trending lower since mid-November. It trades below its 50 & 200 sma on the 4 hour chart and the 50 sma crossed below the 200 sma in a bearish signal. However, divergence on the RSI suggests that the downside could be losing momentum, a signal than can be seen before a move higher.

Gold has picked up off support at 1760. Resistance can be seen at 1787 the 50 sma and 1791 the December high.

Sellers will be looking for a move below 1760 for steeper losses.

EUR/GBP looks to PMIs and EZ retail sales

EUR/GBP is moving higher after steep losses in the previous session. The pair dropped 0.4%, despite eurozone PPI jumping t 21.9%, heaping pressure on the ECB to move to tighten monetary policy.

Today the focus is on composite PMI data for both the Eurozone and the UK. Whilst the Eurozone is expected to tick up slightly from October to 53.4, the UK is expected to tick lower to 57.7.

Eurozone retail sales will also be in focus. Expectations are for sales to rise 1.2% YoY in October, down from 2.5% in September.

Omicron headlines could also influence the pair. News of a drug to treat Omicron developed in the UK is keeping risk sentiment buoyed for now.

Where next for EUR/GBP?

EURGBP trades below its falling trendline dating back to October. The recent rebound from 0.8385 faltered at 0.8535, the weekly high, although the bullish RSI suggests that there could be more upside to be had.

Also watch for a possible bullish crossover of the 50 sma above the 200 sma.

Buyers will be looking for a move over 0.8535 to expose the falling trendline at 0.8560. Beyond here the November high of 0.8595 comes into focus.

Sellers, meanwhile, will look for a move below 0.8470 the 200 sma to open the door to 0.8430 high November 25.