Euro falls as German factory orders decline

The Australian dollar declined sharply today after the Central Bank governor, Philip Lowe issued a dovish statement. In the statement, he said that the bank could be forced to lower interest rates if the economic situation weakens. This was an unexpected statement because it came a day after the bank released its interest rates decision and sounded hawkish. It came two days after a government report recommended sweeping new guidelines for the country’s financial sector. The country is facing a number of challenges such as the falling housing prices, increased household debt and volatility in the commodities market.

The euro declined today after data from Germany confirmed the weakness of the economy. The data released today showed that the country’s factory orders for December contracted by minus 1.6%. This was lower than the gain of 0.3%, which was expected. In November, the orders declined by minus 0.2%. This was the sharpest decline since last year August when the orders declined by 4%. In recent months, the region has continued to release data that is weaker than expected.

The sterling was subdued in today’s trading as uncertainties surrounding Brexit continued to mount. In a statement, European Commission president, Donald Tusk asked Theresa May to present realistic proposals as she restarts talks. He also added that there was a ‘special place in hell’ for people who advocated for Brexit without knowing how to deliver it. This came as Liam Fox said that the country could offer the European Union zero tariffs in case of a no-deal Brexit.

EUR/USD

The EUR/USD pair declined slightly today as investors grew worried about the health of the American economy. The pair is now trading at 1.1388. On the hourly chart, the pair is below the 100-day, 50-day and 25-day EMAs. The Average Directional Index (ADX) has moved to 39, which is a sign that the downward momentum could continue. However, the trend could also reverse since the momentum is easing as evidenced by the momentum indicator.

AUD/USD

The AUD/USD pair declined sharply and reached an intraday low of 0.7120, which is also the 23.6% Fibonacci Retracement level as shown below. The pair’s price is below all the major moving averages while the RSI has started moving up from the oversold level of 17. While the pair will likely continue the downward momentum, there is a likelihood that it will move up slightly to test the important 38.2% Fibonacci Retracement level of 1.7160.

USD/CAD

The USD/CAD pair moved slightly lower today to a low of 1.3180, which is also the 38.2% Fibonacci Retracement level. The pair is slightly below the upper band of the Bollinger Bands while the RSI has moved from the overbought level of 83 to 60. There is a likelihood that the pair will continue moving lower to the 1.3165, which is at the middle of the 23.6% Fibonacci and the lower line of the Bollinger Bands.