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.
Optimism faded, gold surged
- China’s economic data came out better than expected. Industrial output, retail sales, and jobless rate has shown the country is steadily recovering. USD/CNH rose at the start of the day, but it has started to move down already.
- US officials has failed to deliver the expected $908 billion relief package so far, but Joe Biden confirmed that leaders in Congress should get one or both parts through the House and Senate by the end of the year.
- Gold is edging higher ahead of the Fed’s last meeting this year. It will be held on Wednesday at 21:00 MT time. According to Bloomberg, gold may get the support via the weaker USD after the Fed meets as the central bank may ease monetary policy.
- First shots of vaccine have been distributed in the USA, but the constantly rising cases worsened the market sentiment. New York City Mayor said Americans to get ready for a full shutdown. European governments are also tightening measures.
EUR/USD is moving in an uptrend. It has approached the key resistance of 1.2170, which it has failed to break a few times already. If it jumps above it, the way up to the next round number of 1.2200 will be clear. On the flip side, the pair is unlikely to break the 50-period moving average of 1.2130 as it has been nicely supporting the pair since November. The Fed’s meeting on Wednesday will have a huge impact on the pair.
The British pound regained its recent losses. GBP/USD is trading inside ascending channel. If it jumps above the key resistance of 1.3400, the way up to the high of December 3 at 1.3460 will be clear. On the flip side, the move below the recent lows of 1.3300 will push the pair to the next support of 1.3200.
XAU/USD has approached the level of the recent highs at $1 845. Since it has failed to cross it several times, we can expect the pullback. If it manages to break it through, the way up to the high of December 8 at $1 870 will be clear. Support levels are $1 810 and $1 770.
The Australian dollar dipped amid the risk-off market sentiment. It is getting closer to the key psychological mark of 0.7500. It’s unlikely to break it by the first attempt, therefore we may see a retracement. If it finally drops below 0.7500, the way down to the 50-period moving average of 0.7470 will be open. Resistance levels are 0.7580 and 0.7600.
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.