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/USD regains yesterday's losses
The US dollar surged yesterday after the positive US data. Manufacturing and Services PMI reports came out better than expected. Besides, analysts marked that it was the first time for a while that the US dollar rose not because of its safe-haven title in times of the risk-off sentiment, but on its self-strength like any other national currency, when its’ economic data beats estimates. Before that, the greenback was on the back foot as investors favored riskier assets amid hopes for soon vaccinations in the USA and the UK.
That’s why yesterday we have seen a 100-pips drop of EUR/USD, caused by the mixed EU PMI reports and the encouraging US data. However, the 50-period moving average has supported the pair again. If it manages to rise above yesterday’s high of 1.1876. the doors towards the key resistance zone of 1.1890-1.1900 will be open. In the opposite scenario, the move below the support of 1.1830 will drive the pair lower to 1.1800.
The British pound continues edging higher amid hopes for a soon Brexit agreement. EU’s chief negotiator Michel Barnier claimed that even though some disputes are still on the table, both sides are interested in reaching a deal as soon as possible. It dipped briefly yesterday but managed to turn to the upside again. The move above the resistance of 1.3350 will drive the pair to the key psychological mark of 1.3400. Support levels are at yesterday’s low of 1.3300 and the 50-period moving average of 1.3235.
Gold enormously dipped. There are no barriers on its way down to the key support of the intersection of the 200-day moving average and the psychological mark of $1 800. XAU/USD is likely to bounce off this level and turn to the upside. It may meet resistance levels at $1 850 and $ 1870 on the way up.
Moving on to the S&P 500. The stock index is edging higher. If it jumps above the resistance of 3 615, the way to the high of November 16 at 3 630 will be open. In the opposite scenario, the move below the 50-period moving average of 3 575 will drive the S&P 500 to the next support of 3 550.
Finally, let’s discuss crude oil. WTI oil surged to August’s highs on hopes for a vaccine rollout in a couple of weeks. If it manages to close above $43.50, it may rise to $45.00. Support levels are $41.60 and $40.00.
Follow US CB Consumer Confidence at 17:00 MT time!
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.