- The Euro declined sharply on Monday after Chancellor Angela Merkel said her efforts to form a three-way coalition government had failed.
- The gold rallied to a high of 1296.76 on last Friday, targeting the upside resistance at 1300 big figure this week.
The dollar opened the week gapping higher against a basket of six majors thanks to the news that German coalition talks broke down after reacting off resistance on Friday 17 November. The euro declined across the board to test downside supports at the start of the new week after Chancellor Angela Merkel said her efforts to form a three-way coalition government had failed. The gold soared to a high of 1296.76 last Friday amid risk aversion. Whether or not the precious metal could sustain its rally still remain to be seen.
The dollar index (DXY) gapped higher straight forward above H1-period EMA60 during the Monday opening hours after reacting off resistance. It will be interesting to see whether or not the index could correct and retest the pull-back support of the former resistance at long term moving averages on the 1 hour chart in the short term. Keep an eye on the political turmoil in the euro area.
（DXY H4 chart）
Switching gears to non-U.S. currencies now, the euro nosedived early this morning, however, found tentative dual-support of circa 1.1720 on the 4 hour and daily chart. Whether or not the shared currency could hold above the trend support still remain to be seen. The British pound fell back below the support at H1-period EMA60 after shooting up, targeting downside support at H1-period EMA144. The Aussie dollar extended its decline before the commodity currency staged a corrective rally in New York session Friday. Whether or not the currency could whipsaw below H1-period EMA60 in the short term will be important to observe.
（GBPUSD H1 chart）
Take a look at precious metals now. The gold hit a high of 1297.76 after a bullish breakout with risks of corrective down move in the short term. Its short term moving averages went higher sharply and dragged its long term moving averages higher into the state of diverging. It will be interesting to watch whether or not the yellow metal could form its uptrend on the daily chart and reclaim the level of 1300.
（Gold H4 chart）
By JasonZou —— Chief Analyst of AvaTrade China
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.