Two trades to watch: EUR/GBP, Gold

EUR/GBP rises despite plunging German factory orders, EZ retail sales next. Gold looks to ADP payroll report.

EUR/GBP rises despite plunging German factory orders, EZ retail sales next

EUR/GBP picks up off three week low, as concerns over supply chain disruptions and labour shortages in the UK linger.

Renewed Brexit concerns add to the Pound woes.

The Euro slipped in the previous session after PPI came in lower than forecast at 1.1% on August, down from 2.3% in July.

German factory orders plunged -7.7% MoM after rising 3.4% in July, expectations had been for a 2.1% decline.

Eurozone retail sales are expected to rebound and rise 0.8% MoM in August, after declining -2.3% in July.

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Where next for EUR/GBP?

EUR/GBP is extending its rebound off the low reached in mid-September, although still trades below its multi-week ascending trendline support turned resistance which it broke through yesterday.

The RSI is moving out of oversold territory on the 4 hour chart. However, the pair remains pressurized despite this corrective move higher.

It would take a move over the trendline at 0.8530 for the buyers to change the bias and head towards 0.8570 the 50 and 200 sma on the four hour chart.

On the downside, a move below 0.85 the September low could open the door to 0.8450 the low August 10.


Gold looks to ADP payroll report

Gold trades under pressure as treasury yields keep driving the US Dollar higher

The greenback also found support from safe haven inflows amid concerns over surging energy costs, US political infighting over the debt ceiling and US – China tensions.

Rising inflation expectations on the back of higher commodity prices boost the chances of the Fed moving to tighten monetary policy sooner, driving yields higher. This is bad news for non-yielding gold.

Attention will now turn to US ADP Employment report ahead of Friday’s NFP. The ADP report ios expected to reveal 428k jobs added after 374k previous.

A strong number, particularly after yesterday’s solid ISM services number could cement expectations of the Fed tapering as early as next month.

Learn more about Gold

Where next for Gold?

The Gold price had been trading in a falling wedge since early September. On Friday, the price broke out of this wedge. However, the bulls failed to capitaslised on the move and failed to extended beyond the 20 sma on the daily chart.

Failure to break above the 200 sma combined with the RSI in bearish territory is keeping the sellers optimistic of further downside.

A move below 1749 the falling support  and upper band of the wedge could open the door to 1737 the swing low on September 23 and 1722 the September low.

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