Global equities ended last week on a downbeat note driven by mixed earnings results, rising inflation and omicron fears. Moving ahead to this week, the COVID-19 headlines, the latest inflation data from UK and Eurozone, and the Q4 earnings season stand out as key events.
On the earnings front, the companies due to release their results will be the banking gaints GOLDMAN SACHS, MORGAN STANLEY, BANK OF AMERICA and the video streaming pioneer NETFLIX will be among those reporting earnings this week.
The safe-haven metal holding the gains as higher inflation tends to push the demand for safe-havens to the upside. The latest US inflation data showed that the headline CPI jumped to 7%, which was the highest level since 1982.
For this week, considering heavy volatility there are chances the metal can rally back to above the key resistance $1832. On the downside, the decline is more extensive, and it will be hard to rule out a run towards $1800 and $1795 if the metal breaks below $1812.
The US dollar index, which measures the value of the greenback against a basket of six major currencies, remained under pressure for the whole last week and hits its lowest level in three months. This is the sharpest weekly decline seen in the DXY since May 2021. Moving ahead, no important economic events are expected from the US this week, and so the focus shifts back on the coranavirus headlines.
This week, the pair needs to stay above 95.60 to have a chance to develop upside momentum in the near term. If the price break and closes above 95.60, the next upside level to watch is 95.80 then 96.20. On the downside, if the index break below the previous week low of 94.60 the next immediate downside area is to watch 94.00 and 93.80
The currency pair could see a resumption of the upside move this week if the pair holds the current upside momentum. However, considering the recent strong rebound, the US dollar movement will continue to play a vital role in the Euro future direction. The main attraction for EURO this week, the Eurozone inflation figures and ECB meeting minutes on Thursday.
The currency remained in a range above 1.1300 last week, and the initial bias remains neutral for the upcoming week. The key resistance is located for the pair around 1.1480, a break above this level will confirm a possible move to 1.1500/20. On the downside, any meaningful pullback now seems to find some support near the 1.1360 zones, below which the slide could further get extended towards the 1.1300 region.
Dow Jones ended lower for the second consecutive week. In this week, Dow traders are expected to be highly concerned about the US economic health going forward following the release weaker-than-expected US retail sales data on Friday. US retail spending decreased by 1.9% in December, much worse than the expected 0.1% decline.
Technically the overall momentum remains bearish. However, we can see that the index slightly rebounded after touching the lower trendline shown in white. This week, If the bearish momentum continues the next key support area is to watch is 35,600 then 35,430. On the upper side, If the index regains upside momentum and press back above 36,050 then the key resistance area to watch is 36,300/550.
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