US30 has been declining slowly but steadily in the past few days, and the index could soon test the support zone
Gold prices collapsed following the FOMC meeting and extended losses further
Euro struggling as the outlook for the currency turns increasingly bearish
Exotic currency pairs are worth watching, as there is potential for a larger short squeeze
US30
Investors have been digesting the latest statements from the US central bank, which surprised markets with a far more hawkish stance than expected. While this hasn´t led to a reversal in stock markets, it could limit further gains in the near-term as taper talks intensify.
The US30 has been declining slowly but steadily in the past few days, and the index could soon test the support zone at 33,286-33,455 points. A clear break below the former level would then pave the way for a deeper correction that could take US30 to 32,080 points. While the uptrend remains intact for now, equities are under increased pressure and traders will be closely watching the bond market for further clues..
Gold Markets
Gold prices collapsed following the FOMC meeting and extended losses today. XAU/USD broke below the 200 DMA and the psychologically important $1800 support level. For Gold bulls, this represents a major defeat and could trigger position covering from speculators holding long positions. The next major support level now lies at $1676 – which is the March low where XAU/USD posted a double bottom pattern.
The short-term outlook has turned negative and traders looking to buy dips in Gold are increasingly focus on the cross pairs. XAU/EUR has better chances to stage a recovery, and should find strong support ahead of the €1450 level.
EUR/USD
The Euro has been struggling as well, and the outlook for the currency is turning increasingly bearish. While the Fed showed its hawkish side yesterday, the ECB is a long way from even considering taper talks. The currency is likely to stay under pressure in the near-term and extend losses, especially against the Greenback.
A daily close below the 200 DMA signals that we could see a test of 1.17 support soon. A break below this level would spell trouble for EUR/USD and force more Euro longs into liquidating their positions. To the topside, imminent resistance is seen at the 200 DMA (currently at 1.19629, followed by the psychologically important 1.20 level.
USD/ZAR
The exotic currency pairs are worth watching too, as there is potential for a larger short squeeze. USD/ZAR broke above the 14.00 resistance level and is likely to test 14.21 soon - which is the 38.2% Fibonacci level of the March-May decline. The currency pair might see a recovery rally to 14.76 if bullish Dollar sentiment persists.
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Milan Cutkovic has over eight years of experience in trading and market analysis across forex, indices, commodities, and stocks. He was one of the first traders accepted into the Axi Select program which identifies highly talented traders and assists them with professional development.
As well as being a trader, Milan writes daily analysis for the Axi community, using his extensive knowledge of financial markets to provide unique insights and commentary. He is passionate about helping others become more successful in their trading and shares his skills by contributing to comprehensive trading eBooks and regularly publishing educational articles on the Axi blog, His work is frequently quoted in leading international newspapers and media portals.
Milan is frequently quoted and mentioned in many financial publications, including Yahoo Finance, Business Insider, Barrons, CNN, Reuters, New York Post, and MarketWatch.
