The Japanese yen weakened against the US dollar even after relatively strong economic data from Japan. According to the country’s statistics bureau, Japan’s economy expanded by 3.0% in the fourth quarter, a better performance than the median estimate of 2.3%. This expansion led to an annual growth of 12.7%, which was better than the expected increase of 12. 7%. This growth was mostly due to a 1% increase of external demand and a 4.5% increase in capital expenditure.

The euro rose slightly in the morning session ahead of an important meeting of European leaders and some vital GDP data. The leaders will mostly deliberate on the progress of the 750 billion euros recovery fund. Meanwhile, the Eurostat will publish the latest industrial production and trade numbers. Economists polled by Reuters expect the data to show that the industrial production declined by 1%, in December because of the lockdowns imposed by some countries. These numbers will come a day before the preliminary EU GDP data.

The price of crude oil rose sharply in the morning session as US politicians continue to deliberate on the $1.9 trillion stimulus package. The deal is positive for the price of oil because of the demand it would stimulate. The price rose even after the continued increase of rigs in the United States. According to Baker Hughes, the total number of oil and gas rigs rose by 5 to the current 397. The rig count has been on a steady increase in the past few months.

EUR/USD

The EUR/USD pair rose slightly in early trading ahead of the EU industrial production data. It is trading at 1.2130, which is slightly above Friday’s low of 1.2087. On the four-hour chart, the pair formed a bullish engulfing pattern on Friday. It is also above the 25-day and 15-day EMA while the Relative Strength Index (RSI) has continued to rise. The pair will likely continue rising as bulls target the next key resistance at 1.2150.

GBP/USD 

The strength of the British pound continued today in part because of the relatively weak US dollar. The pair rose to an intraday high of 1.3895, which is the highest it has been since March 2018. The price moved above the 25-day and 15-day EMAs. On the daily chart, it is approaching the upper side of the ascending channel. Therefore, while more gains are possible, the pair may experience a reversal in the near term.

USD/JPY

The USD/JPY pair rose to an intraday high of 105.02, which is slightly below last week’s high of 105.18. On the four-hour chart, this price is above the 15-day simple moving average. It is also along the 23.6% Fibonacci retracement level and slightly below the median of the Andrews Pitchfork tool. Therefore, the pair may continue rising as bulls target the next resistance at 106.0.