Euro bounces back ahead of Eurozone inflation data
The euro rose during the Asian session as traders continued to reflect on the European Central Bank (ECB) interest rate decision. Yesterday, the bank decided to leave its interest rate unchanged at -0.50% but hinted at more stimulus in the December meeting. In its statement, bank officials said that they will continue to assess the available information, including the dynamics of the pandemic to make this decision. The monetary policy statement came as the number of Covid-19 cases continued to rise and as Germany confirmed that it will start vaccinations by the end of the year. Later today, we will receive the German retail sales and import price index, preliminary German GDP data, and flash inflation numbers.
The Japanese yen gained slightly against the US dollar as traders reacted to the latest inflation and employment data from Japan. According to the country’s statistics office, the unemployment rate remained unchanged at 3.0% in September, better than the expected increase to 3.1%. The jobs to applications ratio dropped to 1.03 while the Tokyo CPI dropped to -0.3%. This number is usually followed closely because of the importance of Tokyo to the Japanese economy. Also, the industrial production rose by 4% in September from the previous 1.0%. These numbers come a day after the Bank of Japan decided to keep its interest rates unchanged.
The US dollar is down slightly as traders continue reflecting on the impressive economic growth data from the US. The numbers showed that the American economy expanded by 33% in the third quarter. That was the best quarterly increase ever recorded. Still, the concern is whether this growth will continue in the fourth quarter since the government has not yet passed a stimulus package. Later today, the currency will react to the US personal income, spending, and the closely-watched personal consumption expenditure data.
The EUR/USD pair rose from yesterday’s low of 1.1650 to the current 1.1687. On the four-hour chart, the price has crossed the triple exponential moving average (TRIX) indicator while the Relative Strength Index (RSI) has moved above the oversold level of 30. Similarly, the signal and main line of the MACD indicator have moved above the neutral level. Still, this bounce seems to be relatively weak, which means that the price may resume the downward trend today.
The XBR/USD pair rose to an intraday high of 38.50 as traders reacted to news that Germany was planning to start a Covid vaccination this year. On the four-hour chart, the price is slightly above the middle line of the Bollinger Bands. The RSI has moved above the oversold level. It is also approaching the 23.6% Fibonacci retracement level. Therefore, the pair is likely to continue rising as bulls aim for the 38.2% retracement at 39.80.
The AUD/USD pair rose to a high of 0.7046 as traders reacted to the relatively weaker dollar. On the four-hour chart, the price is below the 25-day and 15-day exponential moving averages. The moving average of oscillator remains below the neutral line while the price has formed a double bottom pattern. Therefore, the pair may rise today, with the first resistance being at 0.7065 and the next resistance at yesterday’s low of 0.7000.