Strong USD on Tuesday
The main market tendency today is that the US dollar is rising against its major peers and riskier assets such as stocks and oil are plummeting.
EUR is on fire, while USD touches dips
A lot of news came out that may impact the market. It’s surely not the time to rely only on technical analysis!
Fundamentals
- The market sentiment is still risk-on driven by vaccine news. Pfizer and its partner BioNTech announced that they will start supplying vaccine doses “within hours” after the approval.
- US authorities proposed the new relief package of 908 billion dollars, which is larger than was previously discussed.
- Fed’s Powell testified yesterday and warned that the US economy is ruined and the further recovery remains uncertain.
- US ISM Manufacturing PMI came out worse than expected: 57.5 vs. the forecast of 57.9. It added even more pressure on the USD, which was already trading at the low levels unseen since 2018.
- The governor of the Reserve Bank of Australia claimed that the economic recovery is underway, but it is still uneven.
- The Australian GDP beat estimates. It rose by 3.3%, while analysts anticipated 2.5%. As a result, the AUD edged higher.
- Joe Biden claimed that he wouldn’t immediately remove tariffs on Chinese goods. He is planning to consult with allies in Asia and Europe about the phase-one trade deal. USD/CNH may rise.
- Oil prices dropped as investors doubt OPEC+ will agree on further output cuts.
Watch the daily trading plan!
Technical tips
EUR/USD
EUR/USD is aggressively moving upwards. It has broken through the key resistance of 1.2000 and approached the next barrier of 1.2100, which is a round number and also the peak of the 2017 year. If it manages to cross it, the way up to the 1.2150 will be clear. On the flip side, the move below the key support of 1.2000 will drive the pair to the 50-period moving average of 1.1925.
Gold
XAU/USD moved to the upside, but its growth was limited by the 50-period moving average of $1 815. If it manages to break through this resistance, it may jump to the 100-period moving average of $1 845. In case of falling, the pair will meet the strong support of the 200-day moving average at $1 800, and it’s likely to pull back from it. The breakout of this level will lead gold to the next support of $1 770.
AUD/USD
The Australian dollar was underpinned by the better-than-expected GDP. If it breaks through Monday’s high of 0.7400 the way up to 0.7450 will be open. Support levels are at the recent lows of 0.7350 and 0.7325.
USD/CNH
USD/CNH is moving back and forth inside of the horizontal corridor. Since it has touched the bottom and candlesticks have formed longer lower tails, we can expect the move up. On the way to the top of the range, it may meet the resistance of the 50-period moving average at 6.5700. Support levels are 6.5450 and 6.5350.
Follow the US ADP report at 15:15 MT time and the speech of Jerome Powell at 17:00 MT time.
Similar
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The US unemployment claims are out on Thursday at 15:30 MT time.
Will the US CPI boost the USD?
The American CPI is announced on Wednesday at 15:30 MT time.
Latest news
ECB report is in focus
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Markets await Biden to unveil "trillions dollars"
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
USD came under selling pressure
The US dollar’s weakness offered a boost to emerging-market currencies and oil.
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