WALL STREET RECOVERY RALLY GAINS MOMENTUM
US stocks rebound accelerated in the overnight session as investors ignored the crisis presented by Evergrande. According to the Wall Street Journal (WSJ), Beijing has asked local governments to prepare for the potential downfall of the second-biggest real estate company in the country. The government has asked local governments and other state-owned entities to step up and handle the crisis in an orderly fashion. The stocks rallied after Salesforce boosted its full-year guidance. It expects to make between $26.25 billion and $26.35 billion this year. Also, they rose as investors reflected on the hawkish Federal Reserve decision.
The British pound rally continued in the overnight session as investors reflected on the Bank of England (BOE) interest rate decision. The bank decided to leave interest rates and quantitative easing policies unchanged. It also warned that the recent energy price surge will likely push inflation to more than 4% in the near term. In a statement, Andrew Bailey said that a modest tightening was necessary. Therefore, analysts expect that the central bank will hike interest rates in its March meeting. At the same time, some analysts are warning about stagflation after data showed that private-sector output was starting to slow down
The economic calendar will be relatively muted today. Besides, the most powerful central banks in the world like the Fed, BOE, BOJ, BOC, and ECB have already delivered their September verdict. The main key numbers to watch today will be the IFO business climate numbers from Germany and the Mexican retail sales numbers. Also, investors will focus on a speech by Jerome Powell, the Federal Reserve chair. He will likely provide more clarity about when the bank will move.
EURGBP
The EURGBP pair declined sharply after the latest BOE decision. It tumbled from a high of 0.8615 to a low of 0.8540. On the four-hour chart, the pair has moved between the 50% and 38.2% Fibonacci retracement levels. It has also moved below the neckline of the double-top pattern. It has also formed a double-top pattern while the Relative Strength Index (RSI) has moved to 41. Therefore, the pair will likely keep falling as bears target the key support at 0.8550.
EURUSD
The EURUSD pair rose to a high of 1.1745 as the US dollar remained under pressure after the Fed decision. This price was along the upper line of the descending channel. It also moved below the 25-day moving averages while the Relative Strength Index (RSI) and MACD have risen. Therefore, a bullish breakout will be confirmed if it moves solidly above the upper trendline.
XTIUSD
The XTIUSD pair jumped to a high of 73.67 as optimism returned to the market. The pair rose above the key resistance level at 73.23, which was the previous highest point in September. The bullish trend is being supported by the 25-day and 50-day moving averages while the Relative Strength Index has risen to the overbought level. Therefore, the bullish trend will likely continue if it is above the two moving averages.
