CHINESE AUTHORITIES RECOMMEND REDUCTION IN PURCHASE OF AMERICAN TREASURY BILLS

The US dollar fell today after the news that Chinese authorities recommended a slow down or termination in purchases of American treasury bills. The news resulted in a sharp upward movement for the EUR/USD price. However, the single currency is under pressure due to the anticipated outcome of the elections in Italy and the political crisis in Germany. Additional negative for the euro came from the decline of the French industrial production in December by 0.5% which is 0.1% worse than expected.

Investors’ activity is restrained by the anticipation of important data on the US consumer price index and retail sales that will be published on Friday. In case of acceleration in the pace of inflation growth, the FOMC will have more reasons for more hawkish moves on the interest rates and that in turn will be positive for the greenback.

The GBP/USD demonstrated a high amplitude of price fluctuations today due to the fall of the US dollar and positive news on the British industrial production growth in November by 0.4%, which is twice better than the previous month.

The American crude oil benchmark West Texas Intermediate (WTI) is consolidating after the powerful rising impulse that has been caused by the production cuts in Russia and OPEC and also due to the unexpectedly strong decline in the crude oil inventories in the US, which according to the API have been reduced by 11.2 million barrels against a forecasted fall of only 3.9 million barrels during the previous week.  

EUR/USD

The EUR/USD quotes have shown a sharp upward impulse and as a result tested the inclined resistance and the psychologically important 1.2000 mark. The price fixing above 1.2000 may become the basis for continued growth with the nearest targets at 1.2070 and 1.2200. The RSI on the 15-minute chart is close to the overbought zone and that together with anticipated profit taking after a sharp increase, may result in a rollback soon.

GBP/USD

The GBP/USD has not been able to fix above the resistance at 1.3550 and retreated backwards. In case of the price fixing below 1.3500, we are likely to see a further retreat to 1.3400 and 1.3300. In order to renew the bullish trend, quotes need to gain a foothold above the strong resistance at 1.3600.

USD/WTI

The USD/WTI is consolidating ahead of the release of the crude oil inventories data in the US after which there is a high probability of sharp price movements. Breaking through 64.00 may open the way for the next targets at 65.00 and 66.50. On the other hand, a potential fall is likely to be limited by the inclined support line.