XAU/USD Weekly Forecast (19th October 2020 – 23rd October 2020)

Fundamental view:

A stronger-than-expected U.S. retail sales report lifted appetite for riskier assets, but factory production unexpectedly fell in September and Republicans seemed unlikely to agree on a U.S. stimulus deal before Election Day even as coronavirus cases continue to rise and a labour market recovery stalls. which has risen about 25% so far this year, is considered a hedge against inflation and currency debasement amid the unprecedented global levels of stimulus.

In the upcoming week, The precious metal continues to look to developments from the US political arena, particularly headlines around a potential stimulus package to fight the second wave of the coronavirus pandemic, which is already hurting the prospects of global recovery.         

The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Speech at Oct 19, Building Permits at Oct 20, EIA Crude Oil Stocks Change at Oct 21, Existing Home Sales at Oct 22, and Markit Manufacturing PMI at Oct 23 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.18% higher than the previous week. Maintaining high at 1933.2 and low at 1882.4 showed a movement of 508 pips.

In the upcoming week we expect XAU/USD to show a bullish trend.  The Instrument is trading above the 100 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1930.3 may open a clean path towards 1957.1 and may take a way up to 1981.1. Should 1879.6 prove to be unreliable support, the XAUUSD may sink downwards 1855.6 and 1828.8 respectively. In H4 chart Bullish Gartley pattern formation favors prospects of a bullish trend. Also to be noted Bullish Spinning top formation exerts the expectation of uptrend for the pair.

Preference
Buy: 1903.3  target at 1952.1 and stop loss at 1875.7

 

Alternate Scenario
Sell:  1875.7 target at 1829.8 and stop loss at 1903.3

EUR/USD Weekly Forecast (19th October 2020 – 23rd October 2020)

Fundamental view:

The EUR/USD pair put a halt to its advance and closed the week in the red, around the 1.1700 figure. The decline was the result of a dismal market’s mood, fueled by different pandemic-related developments. There are high chances that the ongoing risk-averse scenario extends next week, as the issues continue to escalate.

US Unemployment Claims on 15th October and Europe Trade Balance on 16th October created a bullish atmosphere whereas Europe German WPI monthly report on 12th October and US NFIB Small Business Index bearish moment on 13th October and US core PPI monthly report on 14th October created a bearish environment for the pair.

The major economic events deciding the movement of the pair in the next week are ECB President Lagarde Speaks, Fed Chair Powell Speech at Oct 19, US Building Permits at Oct 20, US Initial Jobless Claims at Oct 22, Europe and US Markit Manufacturing PMI at Oct 23.  

EUR/USD Weekly outlook:

Technical View:

Last week’s high was 0.03% lower than the previous week. Maintaining high at 1.1826 and low at 1.1688 showed a movement of 138 pips.

In the upcoming week we expect EUR/USD to show a bearish trend. The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1.1661 may open a clean path towards 1.1605 and may take a way down to 1.1523. Should 1.1799 prove to be unreliable resistance, the EURUSD may raise upwards 1.1882 and 1.1937 respectively. Chart formation of a flag pattern in H4 chart sets prospects for a bearish trend. Bearish harami formation in H4 chart escalates the expectation for a bearish trend.

Preference
Sell:  1.1717 target at 1.1606 and stop loss at 1.1804

 

Alternate Scenario
Buy: 1.1804 target at 1.1936 and stop loss at 1.1717

GBP/USD Weekly Forecast (19th October 2020 – 23rd October 2020)

Fundamental view:

Pound has been weaker against the greenback in the previous week. Brexit and US fiscal stimulus talk has left GBP/USD marginally lower in a week full of contradictory reports. Corona virus and elections are the major catalysts that will impact the pair in the upcoming week.

Britain BRC Retail Sales on 13th October and US Capacity Utilization Rate on 16th October created bullish environment for the pair whereas US Core PPI monthly report on 14th October and US Philly Fed Manufacturing Index on 15th October created a bearish environment for the pair.

The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Speech at Oct 19, US Building Permits at Oct 20, BoE Governor Bailey Speech, US Initial Jobless Claims at Oct 22, Retail Sales monthly report, and US Markit Manufacturing PMI at Oct 23.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.25% higher than the previous week. Maintaining high at 1.3082 and low at 1.2862 showed a movement of 220 pips.

In the upcoming week we expect GBP/USD to show a bearish trend.  The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1.2819 may open a clean path towards 1.2731 and may take a way down to 1.2599. Should 1.3039 prove to be unreliable resistance, the GBPUSD may raise upwards 1.3170 and 1.1937 respectively. Chart formation of double top pattern in H4 chart favors prospects of a bearish trend. Bearish harami pattern formation escalates the expectation for a bearish trend.

Preference
Sell: 1.2936 target at 1.2702 and stop loss at 1.3044

 

Alternate Scenario
Buy:  1.3044 target at 1.3228 and stop loss at 1.2936

Brexit uncertainty weighs on pound

US dollar seems to be somewhat strong in the prevailing environment of growing uncertainty about US fiscal stimulus and the potential for a breakdown in Brexit talks. Surge in the COVID 19 cases in Eurozone also weighs on the market sentiment and US consumption data are eyed ahead of the weekend.

President Donald Donald Trump wants a large relief package Congress, above $1.8 trillion already offered. However, Senate Republicans are willing to allow for only $500 billion and House Democrats want $2.2 trillion.

UK Prime Minister Boris Johnson is set to announce his decision on whether to continue or abandon talks on future relations.EU leaders agreed to extend talks with the UK but did not say they would “intensify them.” Moreover, Brussels expects a move from London to state aid and fisheries. Britain’s Chief Negotiator David Frost expressed disappointment.

“Surprised by suggestion that to get an agreement all future moves must come from UK,” Frost, who casts Brexit as a revolution that has brought the nation state back into focus, said. “It’s an unusual approach to conducting a negotiation.”

With time nearing to the election, chances are falling and the safe-haven dollar is on the rise while stocks are hesitating. Former Vice-President Joe Biden maintains his large lead in national and opinion polls against Trump. Both men participated in parallel televised town hall events which probably did little to move the needle. Democrats have a better chance of winning the Senate, opening the door to a quick and large stimulus that investors want. However, the race for the upper house is tighter and markets also fear higher taxes and regulation.

GBP//USD 4 Hour Chart:

Support: 1.2860 (S1), 1.2805 (S2), 1.2721 (S3).

Resistance: 1.2999 (R1), 1.3084 (R2), 1.3139 (R3).

Brexit uncertainty disappoints the cable traders and we expect a bearish trend for GBP/USD.