US dollar index falls after weak inflation data

The euro is little changed today as traders react to the disappointing European GDP data. According to Eurostat, the European economy expanded by 12.6% in the third quarter. That was slightly below the first estimate of 12.7%. Still, the economy contracted by 4.4% from the same quarter a year ago. At the same time, the preliminary employment change declined by a year-on-year basis of 2.0%. Further data showed that the bloc’s trade surplus expanded to €24.3 billion in September from €13.9 billion a year ago. Still, analysts are worried about the recent surge of Covid cases in most European countries and the impact on the economy. 

The US dollar index declined today as traders reacted to the rising Covid cases in the United States. Yesterday, the country confirmed more than 140,000 cases and more than 1,100 deaths. That brought the total number of cases to more than 10.6 million while deaths rose to more than 243k. Worse, health experts, including a senior Biden advisor warned that the number of cases would continue to rise during the cold winter season. The index also dropped because of the low inflation numbers. Yesterday, data showed that the headline CPI declined to 1.2% while the core CPI dropped to 1.6%. And today, data showed that the PPI and core PPI rose to 0.5% and 1.1%, respectively.

American stocks rose in the futures market as traders focused on the strong corporate earnings by Walt Disney. In a statement, the company said that it lost $0.39 per share in the fiscal fourth quarter, which was better than expected. The company made more than $14.7 billion in the quarter, a 23% decline from the previous increase of $19.1 billion. It also reported more than 73 million number of subscribers to its new Disney+ product. The indices are also rising because of the weaker US dollar and the rising hopes of a Covid vaccine. Dow Jones, S&P 500, and Nasdaq 100 futures are all up by more than 0.80%.

EUR/USD

The EUR/USD pair rose to an intraday high of 1.1835 and then erased some of those gains to the current 1.1815. On the four-hour chart, the price is slightly above the 14-day and 28-day exponential moving averages. It is also slightly above the 50% Fibonacci retracement level while the average true range (ATR) has dropped to the lowest level since Tuesday last week. Therefore, the pair is likely to end the week in the current range.

XAU/USD

The XAU/USD pair was little changed today as traders watched out for new vaccine developments. The pair is trading at 1,880, which is slightly higher than this week’s low of 1,850. On the four-hour chart, the price is a few pips below the 25-day moving averages. It is also forming a bearish pennant that is shown in pink. Therefore, in the coming week, the pair may break-out lower and possibly move below 1,800.

USD/JPY

The USD/JPY pair dropped to an intraday low of 104.90, which is the lowest level since yesterday. On the four-hour chart, the price has moved below the important support of 105.00. The price is also slightly below the descending trendline that is shown in pink while the RSI has also started to fall. Therefore, the pair is likely to continue falling as bears target the support at 104.80.