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.
EUR dropped as Covid-19 engulfed Europe
- The focus of traders’ attention shifted from Brexit and the US stimulus package to the coronavirus spread. The World Health Organization claimed that Europe has become the new Covid-19 epicenter. Some countries are thinking to impose lockdowns again.
- US data came out mixed yesterday. US Core Durable Goods Orders exceeded market expectations, while consumer confidence turned out worse than the forecasts. The US dollar closed green yesterday, but today turned to the downside.
- Australian Consumer Price Index for the third quarter came out almost as planned: 1.6% vs the estimate of 1.5%. Besides, the Trimmed Mean CPI, which excludes the most volatile 30% of items from CPI, came out slightly better. The market reaction was positive to the aussie.
- Oil rose on Tuesday as US Gulf producers shut production ahead of Tropical Storm Zeta.
Let’s look at the charts. EUR/USD has touched the lower line of the Bollinger Bands indicator, so we can assume that the reverse is close and the pair may move up today. If it jumps above the key psychological mark of 1.1800, the way to yesterday’s high of 1.1840 will be clear. In the opposite scenario, if it falls below the key support of 1.1750, the doors to 1.1700 will be open.
AUD/USD has surged due to the economic data. If it manages to break the 38.2% Fibonacci retracement level of 0.7160, it should then reach the high of October 14 at 0.7190. Otherwise, the move below yesterday’s low of 0.71250 will drive the price to the 23.6% Fibo level of 0.71000.
USD/JPY has sharply dropped. The way to the key support of 104.00 is open. If it crosses this level too, it may fall to the next round number of 103.50. In the opposite scenario, the move above the resistance zone of 104.85-105.00 will push the pair to the high of October 20 at 105.45.
Finally, let’s talk about gold. It has approached the significant resistance of $1 912. If it breaks it, it may jump to October’s peak of $1 925. However, the strong upper trendline may constrain its way up. So, if it fails to cross $1 912, it may fall to the support of $1 890 and then to $1 875.
The Bank of Canada will deliver the monetary policy report this evening and hold a press conference. Follow it and keep an eye on the Canadian dollar!
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.