US dollar rises as the risk-off sentiment returns
The euro declined against the US dollar even after the relatively strong economic data from the European Union. According to Eurostat, consumer prices rebounded in January this year because of the lockdowns. The core CPI increased from 0.4% in December to 1.4% in January. In the same period, the headline CPI increased from -0.3% to 0.9%. Meanwhile, the producer price index increased from 0.4% to 0.8%. Meanwhile, the weakness of the services sector in January was less severe than expected. The services PMI increased from 45.0 to 45.4. In Germany, the PMI dropped to 46.7 while in Italy and France, the PMI increased to 44.7 and 47.3, respectively.
Global stocks rallied today as investors digested the latest strong corporate earnings. In the UK, the FTSE 100 index rose by more than 0.25% after strong results by Vodafone, GlaxoSmithKline, and Glencore. Other EU indices like the DAX and CAC 40 also rallied. In the United States, Dow Jones and S&P 500 futures rose after the strong results by Amazon. Stocks are also rallying because activity by the WallStreetBets Reddit community has faded. In the past few days, some of the heavily traded stocks like AMC and Gamestop have dropped by more than 40%.
The British pound dropped against the US dollar even after the better services and composite PMI numbers. According to Markit, the services PMI in the UK was at 39.5 in January. This was better than the expected 38.8. The composite PMI also rose to 41.2, which was better than the median estimate of 40.6. The performance of the British pound and the euro are possible because of the overall stronger US dollar. The dollar index has risen by more than 0.20% today.
The EUR/USD dropped to the important support level of 1.200. On the four-hour chart, the price is slightly above the 50% Fibonacci retracement level. It is also slightly below the important support of 1.2050. The downward trend is also being supported by the 25-day EMA and the Bollinger Bands. Therefore, the pair is likely to continue falling as bears target the next support level at 1.1975, which is at the 50% Fibonacci retracement level.
The WTI price rose to an intraday high of $55. On the four-hour chart, the price is above the 25-day and 15-day moving average and the ascending trendline. The momentum indicator is above the neutral line while the price is above the important resistance level at 54.00. Therefore, there is a possibility that the price will continue rising as bulls target the next resistance at $60.
The EUR/GBP pair is wavering near its lowest level since April last year. The pair is trading at 0.8811. On the four-hour chart, this price is below the 50-day and 25-day moving averages. Also, the Relative Strength Index (RSI) is unchanged above the oversold level of 30. It has also formed a descending channel that is shown in white. The pair will likely continue dropping as bears target the next support at 0.8800.