Euro dips as German business sentiment falls in January
The price of crude oil declined today as the market reacted to the spreading coronavirus disease. The disease has infected more than 2,700 people and killed at least 80. Most of these people are in China. Cases have been reported in other countries like the United States, Australia, Canada, and the United Kingdom. In addition to the virus, the market reacted to another attack at the United States embassy in Iraq. The embassy was hit by three rockets and left at least one American wounded. No organization has claimed the attacks although Washington has repeatedly blamed Iran-backed military factions in Iraq.
The euro declined today after the market received negative data from Germany. Data from the Ifo Institute showed that business expectations weakened in January. Expectations from business executives declined to 92.9 from the previous 93.9. This was lower than the consensus estimates of 95.0. The current assessment, which rates the current business conditions, increased from 98.8 to 99.1. This was below the consensus estimates of 99.2. The business climate data, which rates the current business climate and the expectations for the next six months, declined from 96.3 to 95.9. These numbers dampened the mood that the biggest European economy is improving. A Bloomberg Economist said:
Manufacturing is recovering from a substantial shock. A big rebound remains unlikely while industry grapples with structural issues that take time to work through.
The price of gold rose on the spreading of Coronavirus disease. The price is also rising ahead of the important interest rates decision by the Federal Reserve. The Fed will deliver its rates decision on Wednesday. The decision could have a major implication on the price of gold. Indeed, the price of gold has risen by more than 5% since the last rate decision. The price is trading close to the highest level since April 2013.
The EUR/USD pair declined to an intraday low of 1.1015. This was the lowest level since December 2. The price is below the 14-day and 28-day exponential moving averages on the four-hour chart. The price is below the dots of the Parabolic SAR. The signal and histogram of the MACD indicator are below the neutral line. The pair may continue falling ahead of the FOMC decision on Wednesday.
The XBR/USD pair declined to a low of 57.70. This was the lowest level since October 15 last year. The price is along the lower line of the Bollinger Bands. This is usually a signal of the strength of the downward trend. The Moving Average Of Oscillator has also been declining. The same is true with the MACD. There is a possibility that the price will continue falling as the market seeks more clarity on the virus.
The XAU/USD pair rose to a high of 1590. This was the highest level since the first week of the month. The price is slightly above the 14-day and 28-day exponential moving averages. The RSI has moved to the overbought level of 70 while the money flow index is rising towards the overbought level. The pair may continue rising ahead of the FOMC decision.