EURUSD BREAKS SUPPORT ON HOPES ECB WILL BE CAUTIOUS
The euro retreated against a key support level on Wednesday as investors predicted that the European Central Bank (ECB) will go slow on tightening as the crisis in Europe escalates. While the European economy has recovered well, this crisis risks having significant impacts in the near term. For example, the travel industry is expected to be hit while inflation will keep soaring. Data published by Eurostat showed that the bloc’s inflation jumped to 5.8% in February, which was higher than the median estimate of 5.3%. Core CPI, which excludes the volatile food and energy prices, rose from 2.3% to 2.7%. Meanwhile, in Germany, the unemployment rate declined from 5.1% to 5.0%.
The price of crude oil rose sharply as investors predicted that demand will be higher than supplies in the coming weeks. Brent, the global benchmark, soared to $110 for the first time in over 7 years. West Texas Intermediate (WTI) jumped to above $105. Investors are watching the virtual OPEC+ meeting that will take place today. But hopes of more supplies faded on Tuesday when Saudi Arabia vowed to stick with the OPEC+ commitments to add about 600k barrels per day. The US will publish the latest inventories numbers later today.
The Australian dollar moved sideways after the encouraging GDP numbers from Australia. The numbers showed that the economy expanded by 3.4% in Q4 after contracting by 1.9% in the previous quarter. On a year-on-year basis, the economy soared by 4.2%. The statistics agency cited strong personal consumption as the main driver for the economy. Capital expenditure dropped by more than 1.5% as companies remained worried about the Omicron variant. Meanwhile, in the UK, data by Nationwide Society showed that house price index rose by 12.6% in February.
EURUSD
The EURUSD pair continued the bearish trend even after the strong European inflation numbers. As it dropped, it managed to move below the key support at 1.1100, which was the lowest level this year. The pair moved below the 25-day moving average while the Relative Strength Index has moved below the oversold gauge. Therefore, the pair will likely continue falling in the coming days.
GBPUSD
The GBPUSD pair declined even after the strong UK home price index data. It fell to a low of 1.3273, which was the lowest level since last week. It also moved below the important support level at 1.3345. Sterling moved below the 25-day moving average and the 61.8% Fibonacci retracement level. Therefore, the pair will likely continue falling as bears target the next key support at 1.3200.
XNGUSD
The XNGUSD pair rose sharply as the crisis in Europe continued. It rose to a high of 4.75, which was the highest level since Tuesday last week. The pair is above the 25-day moving average and is between the 23.6% and 38.2% Fibonacci retracement level. The MACD has also moved slightly above the neutral level. Therefore, the pair will likely maintain a bullish trend.
