Euro rallies after strong European retail sales numbers
The British pound rose against the US dollar as hopes of a Brexit deal increased. In a statement earlier today, Simon Coveney, the Irish foreign minister, said that a deal could be reached in the next few days. He said that after Michel Barnier, the chief EU negotiator said that the next 48 hours would be crucial. Still, analysts believe that while differences remain, the two sides will ultimately reach a deal. The pair also rose after the better composite and services PMI data from the UK. The two fell to 49.0 and 47.6 respectively, which was better than the expected decline to 47.4 and 45.8.
The euro was little changed against the US dollar after the relatively strong economic data from Europe. In a report, Markit said that the Eurozone’s services PMI dropped from 46.9 in October to 46.0 in September as more countries implemented lockdowns. The composite PMI declined from 50.0 to 45.3. The two were better than analysts’ expectations. Further data from Europe showed that important retail sales increased by 1.5% in October, leading to an annualised increase of 4.3%.
The price of crude oil wavered today as traders waited for the outcome of a scheduled meeting between OPEC and its allies. The meeting’s goal is to agree on the way forward about supply cuts. Most OPEC members, including Saudi Arabia and Russia, have agreed to extend cuts in January and February. On the other hand, the United Arab Emirates (UAE) have proposed other measures such as increasing compliance. Yesterday, a report by the EIA said that oil inventories declined by 679k last week. That was a smaller decline than the expected decrease of more than 2.35 million barrels.
The EUR/USD pair is trading at 1.2125, which is a few pips below yesterday’s high of 1.2140. On the daily chart, the price is above the previous resistance level of 1.1200. The price is also along the upper side of Bollinger Bands, which is a signal of the strength of the trend.
The Relative Strength Index (RSI) has also moved to 73, which is a sign that the pair is not extremely overbought. Additionally, the average directional index (ADX) has risen to 40, which is also a signal of the strength of the rally. Therefore, the pair is likely to continue rallying.
Like the EUR/USD pair, the EUR/CAD has been in a strong rally. Today, it reached a high of 1.5674, which is the highest it has been since September 30. On the four-hour chart, the pair’s uptrend is supported by the short and medium-term moving averages. The signal and main line of the MACD indicator and the RSI have continued to rise. Therefore, the pair will likely continue rising since bulls have the momentum.
The GBP/JPY pair increased to an intraday high of 140.10. On the four-hour chart, the price has moved above the 61.8% Fibonacci retracement level. It has also moved above the short and medium-term moving averages. Also, the signal and main lines of the MACD have moved above the neutral line. The upward trend is also being supported by the rising trendline shown in yellow. Therefore, the pair may continue rising as bulls aim for the next resistance at 140.45.