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IForex Daily: Gold Drops To 4-Month Low, USD Reaches 12-Year High

Published 03/11/2015, 05:48 AM
Updated 09/16/2019, 09:25 AM
EUR/USD
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DJI
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GOOGL
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DX
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GC
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CL
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The dollar continues to march higher against the euro on Tuesday, posting new 11 ½ year highs as uncertainty over the Greek debt reforms, the new Eurozone bond buying program and rising expectations for an interest rate hike in the U.S. add significant pressure to the euro. The recent strength in the dollar appears to have a negative impact in the earnings of multinational companies, thus pushing the main U.S indices lower. Oil prices ended lower despite the drop in industrial inventories, mainly due to a stronger dollar and weak global growth signs which weigh on demand. Gold prices posted new 4 month lows and then recovered as the metal is receiving pressures from a rise in the dollar and a higher demand for investment products that bear interest.

EUR/USD

The euro fell below 1.07 against the U.S. dollar on Tuesday reaching new 11-year lows, as uncertainty regarding the euro zone's quantitative easing program combined with rising expectations for an interest rate hike by the U.S. Federal Reserve add significant pressures on the pair. For importers in the euro zone, fears are increasing that the currency will drop even lower and specifically, Deutsche Bank (XETRA:DBKGn) forecast that EUR/USD will reach parity at the end of this year. For today, investors will await for further talks between Greece and its euro zone creditors, which are set in Brussels. In the week ahead, Thursday's U.S. retail sales report and jobless claims data will be closely watched for further indications on the strength of the recovery.

EUR/USD Chart

Pivot

1.0775

Support

1.065

1.056

1.05

Resistance

1.0775

1.084

1.09

Scenario 1: Short positions below 1.0775 with targets @ 1.065 & 1.056 in extension.Scenario 2: Above 1.0775 look for further upside with 1.084 & 1.09 as targets.Comment: The pair remains capped by a declining trend line and stands below its resistance.

GOLD

On Tuesday, gold prices dropped to four-month lows, as the U.S. dollar reached a 12-year high triggering a massive sell-off. Today, gold prices appear to be rebounding on physical demand, after recent bouts of weakness with investors looking ahead to data from China. In Shanghai, the city's gold, commodities, equities and bonds markets are reportedly in search for ways to attract more foreign funds, and to open its doors to global investors. Today traders are awaiting for discussions in Europe in Brussels between Greece and its euro zone creditors. In the week ahead, markets will be watching Thursday's U.S. retail sales report and jobless claims data for further indications on the strength of the recovery.

Gold Chart

Pivot

1175.35

Support

1155

1147

1139

Resistance

1175.35

1192

1200.8

Scenario 1: Short positions below 1175.35 with targets @ 1155 & 1147 in extension.Scenario 2: Above 1175.35 look for further upside with 1192 & 1200.8 as targets.Comment: As long as 1175.35 is resistance, likely decline to 1155.

OIL

Tuesday's data showed U.S. crude oil inventories fell for the first time in two months. According to analysts, the drop in in stocks was mainly attributed to a decrease in imports and an increase in refinery crude runs. Today the U.S. Department of Energy's Energy Information Administration will release official inventory data on the afternoon. Analysts expect an increase of 4.4 million barrels for the week ended March 6.

Oil Chart

Pivot

50.6

Support

47.8

46.4

45

Resistance

50.6

51.25

52.4

Scenario 1: Short positions below 50.6 with targets @ 47.8 & 46.4 in extension.Scenario 2: Above 50.6 look for further upside with 51.25 & 52.4 as targets.Comment: As long as 50.6 is resistance, likely decline to 47.8.

DOW/USD

U.S. stocks dropped on Tuesday, posting their biggest decline in two months, on expectations that the Federal Reserve may raise rates as soon as June. These worries add support to the U.S. dollar sending it to 12-year highs against the euro, however, this creates concerns that a stronger dollar will have an impact on the earnings of U.S. multinational companies. The Dow ended the day in negative territory with investors focusing on Thursday's U.S. retail sales report and jobless claims data for further indications on the strength of the recovery.

DOW/USD Chart

Pivot

17900

Support

17620

17550

17490

Resistance

17900

18020

18155

Scenario 1: Short positions below 17900 with targets @ 17620 & 17550 in extension.Scenario 2: Above 17900 look for further upside with 18020 & 18155 as targets.Comment: The RSI is below its neutrality area at 50%.

GOOGLE

Google (NASDAQ:GOOGL) chief financial officer Patrick Pichette decided on Tuesday afternoon to retire from the tech giant. In January, Pichette expressed his pessimism in regards to the future of Google Glass during fourth quarter earnings and more recently, he blamed a stronger dollar for some of the company's revenue losses. The company's stock fell about 1 percent in after-hours trading and then became flat.

Google Chart

Pivot

569

Support

569

553

543

Resistance

585

590.5

598

Scenario 1: Long positions above 569 with targets @ 585 & 590.5 in extension.Scenario 2: Below 569 look for further downside with 553 & 543 as targets.Comment: The immediate trend remains up and the momentum is strong.

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