- November 12, 2020
- Posted by: Analysis Team
- Category: FOREX, Technical Analysis
The Japanese yen strengthened against the US dollar in overnight trading as traders reacted to the September machinery orders. According to the statistics bureau, the core machinery orders declined by an annual rate of 11.5% in September. That was better than expected and the previous month’s decline of 11.6% and 15.2%, respectively. Further data showed that the country’s factory gate prices declined by 0.1% in October leading to an annual decline of 2.1%. The number is an indication that the country is going through low inflation.
The British pound is little changed against the US dollar as the market reacts to the UK house price index. According to the Royal Institute of Chartered Surveyors (RICS), the house price index rose to 68% in October. That was a better number than the expected increase of 55%. Last month, the index was at 62%. In the morning session, the sterling will react to the GDP data from the UK. Analysts polled by Reuters expect the data to show that the GDP bounced back by 15.8% in the third quarter. That will be a record increase but coming from a low base in the second quarter. We will also receive the manufacturing and industrial production data as well as the construction output data.
The economic calendar will have several important numbers. In the United States, the bureau of statistics will release the key inflation numbers for October. Analysts expect that the rate of inflation will show that inflation increased to 0.1% leading to an annualised increase of 1.3%. We will also receive the initial jobless claims numbers from the US. Other important numbers to watch will be crude oil inventories by the EIA. In Norway, we will get the third-quarter GDP estimate while in Sweden, the statistics office will release the CPI numbers.
The EUR/USD pair is trading at 1.1779, which is slightly higher than yesterday’s low of 1.1743. The four-hour chart shows that the price is substantially lower than this week’s high of 1.1790. It is also below the 15-day and 25-day exponential moving averages while the DeMarker indicator has moved to the oversold level. The pair seems to be forming a bearish pennant pattern, which is an indication that it will continue falling as bears aim for the next support at 1.1700.
The GBP/USD pair dropped to an intraday low of 1.3214 from yesterday’s high of 1.3313. On the four-hour chart, the price is above the 25-day moving averages. It is also above the ascending trendline that is shown in green. Also, the awesome oscillator has started to fall while the signal and main line of the MACD have started forming a bearish crossover. Therefore, if the pair moves below the EMA, it will continue falling with the next target being at 1.3180.
The XBR/USD pair declined to an intraday low of 43.17 from yesterday’s high of 45.35. The overnight low was also important to support as the yellow line shows. The price is above the 25-day moving average while the RSI has moved from the overbought level of 78 to the current 65. Therefore, the pair is likely to resume the upward trend today as bulls aim to move above yesterday’s high of 45.35.