EURO FALLS AHEAD OF CENTRAL BANK MEETINGS
Global markets jumped today after Chinese authorities said they will continue supporting the stock market. China’s Shanghai index jumped to more than 4%, the highest jump since 2015. In Europe, stocks gained after Moody’s downgraded Italian bonds to stable. This was a better report than most investors had anticipated. Investors were expecting the company to downgrade Italian bonds to junk. In the US, futures pointed to a higher open as traders eyed important corporate earnings. This will be the busiest week in terms of earnings because companies like Alphabet, Amazon, Boeing, and Caterpillar will release their earnings.
Crude oil rose slightly as traders waited for a reaction from the US on Saudi Arabia. The country has been accused of killing a journalist in Turkey. This news is important because Saudi Arabia is the second biggest exporter of crude oil. Sanctions at this time will mean higher crude oil prices. This is because sanctions on Iran will go into effect in less than a month’s time. Traders are also looking ahead to this week’s inventory numbers. In the past four weeks, the numbers have shown increasing inventories. Additionally, investors will pay attention to relations between the US and Russia after the former withdrew from an important nuclear treaty.
The USD moved higher today as Treasury yields remained unchanged after last week’s gains. The dollar index rose by 15 basis points as its peer currencies declined sharply. The euro fell ahead of the upcoming ECB meeting and after the decision by Moody’s to downgrade Italian bonds. Even after the Moody’s decision, the Italian government committed itself to the recently-released budget proposal.
The EUR/USD pair jumped to an intraday high of 1.1570 at the open of the Asian markets. The pair then declined sharply to an intraday low of 1.1490. The downward momentum seems strong as shown by the lower lows trend. This is also confirmed by the momentum indicator and the double EMA as shown below. There is a likelihood that the pair will move to a low of 1.1460.
The price of gold moved slightly lower today as the USD strengthened. The XAU/USD pair reached an intraday low of 1220. This was the lowest level since Thursday last week. However, the pair remains at an elevated level after jumping sharply two weeks ago. On the hourly chart shown below, the pair is moving within a trend, which means that a break out will likely happen. This will be either in an upward or downward direction.
The GBP/USD pair dropped sharply today to an intraday low of 1.2990. As it did this, it crossed the important support level of 1.3000 as shown on the 6-hour chart below. The pair will likely continue moving lower as it moves to test the important resistance level of 1.2920. This is supported by the double EMA and the bears power indicator shown below.