The EURUSD pair has been declining in 2019 and appears to have bottomed at 1.0878. The pair is likely to continue moving upwards in 2020 for four reasons.
- There are signs that the European economy has bottomed as evidenced by recent PMI data. Second, the Fed has signalled that it won’t hike rates in 2020.
- The dovish statement could push the USD lower.
- The win by Boris Johnson could normalize relations between the European Union and the United Kingdom.
- Finally, the US election could weigh on the US dollar. Therefore, the pair could reach 1.1300 by June 2020 and 1.1400 by December 2020.
The GBP/USD pair rose sharply as Boris Johnson’s party won a commanding lead. The pair has been declining since 2015 when it reached a high of 1.7223. There are three reasons why the pair could continue to soar in 2020.
- The US election and the Fed commitment to maintaining interest rates could weigh on the US dollar.
- Boris Johnson’s win could bring back investors and corporate confidence to the UK.
- After pausing on rate hikes, the BoE could implement one or two hikes in 2020. This will likely push the GBP/USD higher. This is also the 50% Fibonacci Retracement level on the weekly chart. It could reach the 61.8% Fibonacci level of 1.5000 by December.
The USD/JPY pair has been forming a descending triangle pattern on the weekly chart. The support of this pattern has been the 104.40. In 2020, there will be several things to watch.
- Japan and South Korea could attempt to iron out their trade conflict.
- The North Korea crisis could escalate. This is often a bullish factor for the yen.
- A trade deal between the US and China will be a good thing for Japan. This is because Japan is an export-oriented country.
- The BOJ could signal that it may abandon negative rates in 2021.
- In June, there is a likelihood that the pair will test the important resistance level of 112, which is also the 50% Fibonacci Retracement level.
The XAU/USD pair has been on an upward trend since October 2015, where it had reached a low of 1046. The pair hit a high of 1556 in 2019. In 2020, the pair will be affected by several factors.
- The dovish Federal Reserve could lead to a weaker dollar and a higher gold price.
- The uncertainties of the upcoming US election could see the gold price move higher.
- Weak corporate earnings from the US could raise the likelihood of a corporate recession. This tends to be positive for gold price.
On the other hand, a trade deal between the US and China would be negative for gold. The potential scenario is where the XAU/USD pair retests the 38.2% Fibonacci Retracement level of 1360 by June. It could then end the year at 1500.
We have a lot to look out for this year, but we hope it’s going to be both eventful and fruitful for the trading.
Prepare your strategies and economic calendars!