The dollar index (DXY), which tracks the currency against key rivals extend its weekly loss ahead of the most awaited economic data this week US CPI report, which is a measure of inflation is one of the important data which helps the US Federal Reserve to decide on further interest rates. The US CPI numbers will be coming out at 13:30 (GMT) today.
The market participants forecast a 6.2% inflation - that would be 0.3% lower than in December. On a monthly basis, the CPI is seen rising to 0.5% versus 0.1% previously. However, a higher-than-expected reading should be taken as bullish for the USD, while a lower-than-expected reading should be taken as bearish for the USD.
European and UK shares continued to trade higher on Tuesday, registering modest gains. Meanwhile, US stock futures trading in a narrow range following the previous session gains as traders and investors are waiting for fresh inflation data.
Crude oil futures reversed from the previous session highs after the US announced plans to release 26 million barrels of oil from strategic reserves, countering the impact of Russian output cuts and recovering Chinese demand. Moving ahead, the US CPI data and weekly crude inventory data will be key to deciding the further price movement for oil prices.
In the currency market, the British Pound rebounded back to near 1.2200 against the US dollar during the European session on Tuesday. The upside momentum is supported by the release of robust UK employment data. While considering the recent rebound the US dollar movement will continue to play a vital role in this currency pair's future direction.
Precious metals are moderately higher in early European trading Tuesday, as the gold price has quickly rebounded from early selling pressure. While the upside momentum is limited Investors remained concerned after several US Federal Reserve policymakers signalled that they were unwavering in their fight against inflation and that any talk of a pause in rate hikes was premature.
On the data front, the UK released upbeat jobs data on Tuesday. UK’s Unemployment Rate reprints the 3.7% figure for three months to December, unchanged from the September to November period. The number of people in work in the UK rose by 74K in the three months to December, well above forecasts of a 40K increase.
Moving ahead today, the important events to watch:
Eurozone – GDP: GMT – 10.00
US – CPI: GMT – 13:30
Worldwide, more than 677 million people have been confirmed infected and more than 6.78 million have died. The United States has confirmed over 104 million cases and has had more than 1.14 million deaths from COVID-19, the highest total in the world.
Technical Outlook and Review
EURUSD: The currency pair rebounded back to above 1.0760 during the European session. For today, the first resistance is located for the pair at around 1.0800, a break above this level will confirm a possible move to 1.0870. On the downside, any meaningful pullback now seems to find some support near the 1.0700 zones, below which the slide could further get extended towards the 1.0650/30 region.
The important levels to watch for today: Support- 1.0700 and 1.0650 Resistance- 1.0800 and 1.0870.
GOLD: For today, the first key support level is located at 1850. In case it breaks below this level, it will head towards the next support level which is located near 1838. On the upper side, If the metal regains strong upside momentum and press back above 1880 then the key resistance area to watch is 1895.
The important levels to watch for today: Support- 1850 and 1838 Resistance- 1872 and 1880.
Quote of the day - In trading you have to be defensive and aggressive at the same time. If you are not aggressive, you are not going to make money, and if you are not defensive, you are not going to keep money. -Ray Dalio.