Euro breaks out after strong European confidence data
The euro rose sharply against the US dollar as investors reacted to the relatively strong sentiment data from the European Union. According to the European Commission, the services sentiment increased from -6.1 in January to -3.3 in February. In the same period, sentiment in the industrial sector increased from -17.7 to 17.1. Consumer confidence rose from -15.5 to -14.8. The report cited the ongoing vaccination process and the fact that some countries have started to reopen as the leading reasons for the improving sentiment.
The US dollar declined against key currencies as traders digested the two-day testimonies by Jerome Powell, the Fed chair. In his testimony, he said that the US continues to have an uneven recovery and that the bank will continue to provide support. The currency also reacted to the latest economic data from the United States. According to the statistics agency, the economy grew by 4.1% in the fourth quarter after rising by 33% in Q3. Further data revealed that the US durable goods orders rose by 3.4% in January after rising by 0.5% in December. Core durable goods orders rose by 1.4% in the same period.
US futures are mixed after the record close of the Dow Jones yesterday. Futures linked to the Dow are up by 50 points while those tied to the S&P 500 are down by 10 points. Investors are waiting to see whether Congressional Democrats will pass Biden’s $1.9 trillion stimulus package tomorrow. The indices are also reacting to the rising yields, with the US 10-year note rising to 1.4%, the highest level since February last year. Analysts believe that higher rates will hit the important tech sector relatively hard.
After days of consolidation, the EUR/USD price rose to an intraday high of 1.2220, which is the highest it has been since January 6. On the four-hour chart, the pair managed to move above the previous resistance at 1.2180, where it has struggled to move in the past few weeks. The price also moved above the important 23.6% Fibonacci retracement level while the RSI moved above the overbought level. Therefore, the pair may continue rising as bulls target the next resistance at 1.2250.
The Dow Jones index soared to a record high of $32,008. On the four-hour chart, this performance happened after the price formed a widening channel that is shown in white. It has moved above the short and longer-term moving averages. Also, the money flow index has continued to rise. Therefore, the index will likely continue rising as bulls target the next psychological level at $32,100.
The German DAX index declined to an intraday low of €13,945, which is lower than the year-to-date high of €14,170. The index is also above this week’s low of €13,658. On the four-hour chart, the price seems to be forming an ascending triangle that is shown in white. It is also at the same level as the 25-period moving average. Therefore, the index will likely continue rising as bulls target the resistance level at €14,173.