DOLLAR INDEX RISES AHEAD OF A BUSY MARKET WEEK
The US dollar index rose slightly during the Asian session following US economic data released on Friday last week. Data showed that the US economy expanded by 3.5% in the third quarter. This was higher than the 3.3% that traders were expecting but lower than the second quarter’s 4.2%. The growth in the economy was mostly attributed to the increase in consumer spending which was facilitated by lower unemployment rates and higher wages.
The price of crude oil rose slightly in the Asian session. On Friday, Baker Hughes released the oil rig data that showed an increase in oil rigs by three. This was the third week of straight increases. The rig counts have been on an upward trajectory since June 2015 when the price of crude oil was still low. However, the price faces major challenges this week as investors worry about supplies.
The euro rose slightly in the Asian session. This was even after Angela Merkel’s coalition government continued to face increased political tensions. On Sunday, a regional election in Hesse saw the coalition parties lose. The Christian democrats lost 10 points while the Social democrats suffered the worst defeat ever. This means that Merkel’s chances of serving a full term have reduced sharply. In addition, on Friday, S&P cut Italy’s outlook to negative and affirmed its credit rating.
The EUR/USD pair rose slightly today after reaching a low of 1.1335 on Friday. The movement in price today is important because last week, the pair had almost touched the important level of 1.1300. On the four-hour chart, the current price is along the 14-day moving average but lower than the 28-day EMA. The RSI has moved from 30 to the current 44. The pair will likely move up as shorts exit their previous trades at a profit. However, the movement will still depend on the ADP employment data on Wednesday.
The GBP/USD pair halted the decline started on October 16. The pair is now trading at 1.2833, which is close to the lowest level since September 6. The pair’s price is below the 14 and 21-day EMA. The double EMA shows that the pair has more downward room to run. The RSI is currently at 29, which is a further proof of the downward momentum. Therefore, the pair could drop to the 1.2800 level. However, the decline will also depend on the decision by the Bank of England on Thursday.
The XBR/USD pair halted the recent declines and rose to an intraday high of 77.93. This was the highest level since October 23. The price is also along the upper band of the Bollinger Bands while the RSI is at 52. While the pair could continue to rise, there is a likelihood that it will continue the downward trend. If it does, it will continue until it reaches a low of 70.