USD weakness continues as traders price-in no 2020 rate hikes
Global stocks were mixed today on thin trading. In China, stocks rose, with the Shanghai composite and A50 rising by 10 and 13 points respectively. In Europe, markets in Germany, Sweden, Denmark, and Norway were closed while those in Belgium, France, and the United Kingdom had an early close. The FTSE declined by 33 points while CAC declined by 3 points. Meanwhile, US futures pointed to a lower open. Futures tied to the Dow declined by 10 points while those tied to the Nasdaq declined by 6 points.
The price of crude oil declined below an important support as tensions in the Middle East intensified. Today, protesters stormed the US embassy in Baghdad, Iraq. Donald Trump blamed the protesters on Iran. These protests were in response to military strikes by the US on Sunday. The strikes targeted Kataib Hezbollah, which is an Iranian-funded terrorist group. That was in retaliation to an American contractor who was killed last week. The price of crude oil has been on an upward trend in December after OPEC+ agreed to reduce supplies.
The USD weakened against key currencies as traders continued to react to the dovish statement by the Federal Reserve. The dollar index, which measures the strength of the USD against a basket of currencies has declined by almost two percent in December. The market today received positive PMI data from China. Later on, the Conference Board will release the consumer confidence data for December. The market will also receive the house price index data for October. This will be a day after data showed a surprising rise of pending home sales.
The EUR/USD pair continued the rally that started on December 22, when it was trading at 1.1065. The price reached a high of 1.1232. This was the highest level since August this year. The price is above the 14-day and 28-day moving averages. The RSI has moved above the overbought level of 70 while the signal line of the MACD has been rising. The pair may continue to rise ahead of the new year.
The XBR/USD pair declined to a low of 65.45. This was the lowest level since December 26. As the price dropped, it broke past the important support of 66.40. The short and medium-term exponential moving averages made a bearish crossover. The pair also moved below the right shoulder of the head and shoulder pattern. There is a likelihood that the price will continue declining in the first days of the new year.
The Japanese yen has been strengthening against the USD in the past few days. The pair has fallen from a high of 109.68 to a low of 108.50. The price is along the lower line of the Bollinger Bands while the RSI has remained below the oversold level. The pair may continue to decline to test the important support of 108.00.