DOW AND NASDAQ DIVERGE AS INVESTORS REFLECT ON MIXED EARNINGS

American stocks wavered on Tuesday as investors reflected on the latest corporate earnings. The Dow Jones rose by 100 points while the S&P 500 and Nasdaq 100 declined by about 0.20% each. Peloton rose by more than 20% for the second straight day after the company’s CEO resigned. Other big winners were firms like Harley Davidson and Chegg that reported strong earnings. On the other hand, Pfizer’s shares declined by more than 6.50% as investors reacted to the company’s weak guidance. As a result, other vaccine-related stocks like Moderna and Novavax also retreated.

The price of crude oil and natural gas declined slightly as investors focused on the ongoing diplomatic standoff between the US and Russia. In a statement on Tuesday, Emmanuel Macron said that Putin committed not to escalate the tensions by invading Ukraine. The Russian foreign affairs said that the two leaders had not reached such a deal. Russia has long maintained that it was not intending to invade Ukraine. The crisis is important for oil and gas prices because Russia is one of the biggest producers in the world. At the same time, Europe buys most of its oil and gas from Russia.

The economic calendar will be a bit muted today. In Germany, the statistics office will publish the latest exports and imports numbers. Analysts expect the data will show that imports declined by 1.5% in December while exports declined by 0.2%. These numbers will be in line with previous numbers that revealed that the German economy underperformed in the fourth quarter. Other important data will be the latest US inventory numbers by the Energy Information Administration (EIA).

EURUSD

The EURUSD pair continued moving sideways as investors start focusing on the upcoming American consumer inflation data. The pair is trading at 1.1418, where it has been in the past few days. On the four-hour chart, it has formed a bullish flag pattern. It is also slightly above the 25-day and 50-day moving averages. Therefore, there is a possibility that the pair will have a bullish breakout later this week.

XBRUSD

The XBRUSD pair tilted lower ahead of the upcoming inventories data. It fell to a low of 89.60, which was lower than this month’s high of 93.37. It managed to move slightly below the key support level at 90.0. Also, it dropped below the 25-day moving average while the MACD has formed a bearish divergence pattern. Therefore, the pair will likely continue falling as bears target the key support at 87.30.

USDJPY

The USDJPY pair rose to a high of 115.90, which was the highest level since January 28. On the four-hour chart, the pair is slightly below the upper side of the Bollinger Bands. It has also moved slightly above the 25-day MA while the Relative Strength Index (RSI) has been in a bullish trend. Therefore, the pair will likely keep rising.