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.
Vaccine hopes vs. Covid-19 resurgence
The market sentiment is mixed, and the US dollar is trading near the lowest levels for over two years. Let’s have a look at the main market movements today.
- Pfizer held the final trial and announced that its vaccine is 95% effective. The company will apply for the first US regulatory authorization this week.
- However, the tug-of-war between vaccine hopes and the Covid-19 resurgence continues. Europe and the USA have imposed fresh social distancing restrictions. Just yesterday New York shut down schools, and that pushed the S&P 500 even lower.
- Australia’s labor market is on the way to recovery. Employment change and the jobless rate were better than expected. However, AUD/USD is dipping, despite the optimistic data.
- Good news for the UK: EU Trade Commissioner claimed that the Brexit deal is in the last moments to be reached. Elsewhere, UK’s inflation data beat estimates yesterday and that added tailwinds to the GBP as well.
- Pay attention to the releases of the US data and Lagarde’s speech as it will impact most of the pairs!
EUR/USD has been nicely supported by the 50-period moving average so far, so we can assume that the pair can bounce off it and jump higher to the 1.1890-1.1900 area, where we can await the pullback. If it manages to break it, the way to 1.2000 will be clear. In the opposite scenario, if it drops below the 50-period moving average of 1.1835, it may fall to the next support of 1.18000.
Fundamentals are positive for the pound, and GBP/USD is approaching the support of the 50-period moving average, so perhaps it should reverse and rally up. There is a strong resistance at the 1.3290-1.3300 zone. If it manages to break it, the way to the next round number of 1.3350 will be clear.
XAU/USD is trading near the strong support of $1 860, which it has failed to cross several times already. Therefore, gold may turn to the upside and rise till it reaches the resistance of $1 880. However, if it breaks through $1 860, it may fall to September’s dips of $1 850.
The S&P 500 has fallen below the 50-period moving average, and now it’s trying to regain its losses. If it jumps above the resistance of 3 590, the way up to 3 630 will be open. Support levels are 3 560 and 3 460.
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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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.