EURUSD Forms a Double Top Pattern
The euro posted modest gains on Friday as price action settled near March 13 highs of 1.1329, forming a double top pattern. The gains came as final inflation figures for February showed that consumer prices rose 1.5% on the headline. Meanwhile, core CPI rose 1.0% as seen from the flash estimates a few weeks ago.
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EURUSD Could Extend Lower
If the current double top pattern is validated, then a break down below 1.1289 could trigger declines in the common currency. The minimum downside objective is at 1.1268, but price could extend lower to retest support near 1.1251 level. This comes as various oscillators are singling a hidden bearish divergence giving support to the downside move.
USDJPY Loses Momentum as Trade Talks Continue
The March deadline for the US-China trade talks is likely to be extended with no clear outcome from the negotiations held so far. Reports from China showed that the vice-Premier, Liu He spoke to US Treasury secretary Mnuchin and with other trade representatives. Meanwhile, the Chinese premier retired the government’s policies to support growth including tax cuts.
USDJPY Showing Exhaustion Near the Top
The USDJPY currency pair posted a rebound last week, and this sent prices briefly higher. However, failure to break past the March 5th highs at 112.13 resulted in the USDJPY posting a lower high. A follow through to the downside from here could put USDJPY at risk of retesting the lower support at 109.83. However, price will need to clear past the initial support at 111.40 level for the downside to be validated.
Gold Trades Subdued, Awaiting Global Cues
Gold prices closed last week with some bullish gains, extending the modest gains for the second consecutive week. But the reversal remains far off from recovering the declines from two weeks ago. China-US trade talks remain the central theme and this week’s FOMC meeting is another factor that is keeping gold prices steady for the moment.
What’s Next For Gold?
After the breakdown, gold prices bounced off the support at 1290.37 leading to a reversal in the declines. Gold initially tested highs of 1311.14 before easing back last week to recover the declines. This has resulted in what could be a possible head and shoulders pattern.
A break down off the inclined neckline support could validate this bearish pattern which could see gold extending declines to 1284.63. Alternately, a breakout above the current resistance at 1306.00 could see gold likely to continue its correction to the upside, eventually reaching out to 1320 level.
