The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
Beating data from Microsoft and Google, Fed is eyed
- Microsoft and Google have published strong earnings data. Google gained from ad sales and internet search. Microsoft mostly benefited from the cloud-computing product, Azure and big gains for Xbox helped as well. Keep an eye on the charts of these stocks as they may rise today on the positive earnings data.
- S&P 500 (US 500) and NASDAQ (US 100), which include these stocks, are driving up. However, the rise is quite modest due to the drop of Tesla.
- Australia published worse-than-expected inflation data signaling Australia will lag major economies like the Fed. That pressed down the Australian dollar.
- The main focus of traders is on the Fed meeting today. According to Bloomberg, if the Fed changes the policy direction today or gives any sign of it, we might see a massive correction on the market. It’s a must-see event for traders. Don’t miss out!
- OPEC+ members claimed it would add more oil supply to the market as Chinese and US economies are recovering and the demand growth is widely expected.
USD/JPY has finally escaped the channel, breaking through its upper line. If it manages to break through the resistance zone of 109.00-109.15, it will rally up further to the early April highs of 109.90-110.00. However, since the RSI indicator is close to 70.00, the price is too high and the reverse down may happen soon. If it crosses yesterday’s low of 108.65, it will fall to the 50-period moving average of 108.25.
AUD/USD is falling on the poor inflation data. It’s getting closer to the lower line of Bollinger Bands of 0.7720. If it manages to break it, the way down to the chain of recent lows of 0.7700 will be open. The price shouldn’t break lower 0.7700 on the first try. The move above the midline of BB at 0.7760 will push the pair up to Monday’s high of 0.7800.
EUR/USD is edging higher inside the channel in the short term, but the long-term trend is still downward. Thus, if it breaks through 1.2110, it will push the pair further up to the two-months high of 1.2175. Support levels are the 100-day moving average of 1.2050 and the one-week low of 1.2000.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
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This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.