Weekly technical outlook – EUR/USD, GBP/USD, Gold [Video]

US data, geopolitics – Gold 

Gold attracted fresh safe-haven demand on Monday amid renewed geopolitical tensions during the weekend as Russia attacked Ukrainian power plants and the US approved Ukraine’s use of long-range US missiles to strike within Russia.

While Trump has promised to end the war, uncertainty over how and when he will achieve this may keep investors leaning toward safe-haven assets like gold.

The recent sharp correction in gold was largely driven by speculation that the Fed might pause its rate-cut cycle sooner than expected. The stronger-than-expected US CPI and retail sales reports have pushed the odds of a December 25bps rate cut to a coin toss. It’s unclear whether Trump’s victory has influenced the Fed’s recent hawkish communication tone, but market watchers will look for more clarity from Fed speakers later this week, along with key data points like jobless claims, the Philly Fed index, and existing home sales.

For gold to sustain its bullish outlook, however, it will need to clear the $2,600 level. Until then, the recent bounce in the price may remain unconvincing.

EZ flash PMIs – EUR/USD

EURUSD dropped sharply to a one-year low of 1.0495 on Thursday, breaking its previous upward trend at the expense of a strengthening dollar. However, the pair managed to close above the key 1.0500 support last week, leaving traders awaiting a fresh catalyst for the next move.

The Eurozone's flash PMIs for November could be a source of volatility on Friday, especially as forecasts are unchanged from prior readings, raising the risk of a surprise in either direction. ECB comments throughout the week, including those from President Christine Lagarde after the German PMI release on Friday, will also be in focus. Growth concerns were a key theme at the last ECB meeting, and if the data increase the risk of a stagnating euro economy, EURUSD may dip below 1.0500 and toward the 1.0400 level.

On the upside, a sustained move above 1.0550 could activate fresh buying, but for a true bullish reversal, EURUSD would need to clear 1.0950-1.1000.

UK CPI inflation – GBP/USD

GBPUSD was another victim of the greenback, but unlike EURUSD, the pair continues to trade above its one-year-old support trendline seen at 1.2580, providing better potential for a rebound.

The UK calendar promises an interesting week, delivering CPI inflation data on Wednesday and retail sales and flash S&P Global business PMI figures on Friday. The focus will particularly fall on the inflation readings as investors anticipate a resurgence back above the central bank’s 2.0% target and a higher services inflation of 5.0%, which could consequently exclude the case for a 25bps rate cut in December.

Should the data come in stronger than forecasts suggest, GBPUSD may attempt to crawl back above its August’s low of 1.2663 and perhaps stretch toward the 1.2730 barrier or even higher to 1.2800.

Otherwise, a slide below 1.2550-1.2580 could signal a bearish continuation, probably straight to the 1.2400-1.2440 support zone.