US dollar falls, gold rises ahead of the senate election

The US dollar declined against most currencies as traders waited for the outcome of today’s runoff election in Georgia. The election will determine who will be the Senate majority leader between Mitch McConnel and Chuck Schumer. If Democrats win the two seats, Schumer will be the leader and help Joe Biden fulfil his agenda. He will help him raise taxes and offer a generous stimulus to the country. On the other hand, if McConnel retains his seat, he is likely to not agree to Biden’s bills aimed at reversing most of Trump’s policies.

The euro rose against most currencies after the relatively strong economic data from Germany. According to the statistics bureau, the overall retail sales rose by 1.9% in November as the country started to experience the new wave of the virus. This increase led to an annualised growth of 5.6%, which was slightly better than the expected 3.9%. The bureau also released mixed jobs numbers for December. In total, the unemployment rate remained unchanged at 6.1% while the unemployment change dipped by 37k.

The British pound was little changed today after Boris Johnson announced a new seven-week lockdown to slow the spread of the new virus. He ordered the immediate closure of all schools until mid-February even as the country is issuing vaccinations. He warned that the National Health Service would be overwhelmed if the government took no action. At the same time, business groups said that they will need more support. The new lockdowns came a few days after the country successfully left the European Union with a deal.

GBP/USD 

The GBP/USD pair is trading at 1.3580, which is substantially lower than yesterday’s high of 1.3700. On the four-hour chart, the price is slightly below the lower side of the ascending channel that’s shown in red. It also seems to be forming a bearish flag pattern while oscillators have started to rise. Therefore, the pair will possibly break-out lower to 1.3500 in the near term.

EUR/USD

The EUR/USD pair rose to an intraday high of 1.2276 ahead of the Georgia election. On the four-hour chart, the price is slightly above the 25-day and 15-day exponential moving averages. The Average Directional Index (RSI) has started to drop, which is a sign that the upward trend is losing steam. The Relative Strength Index (RSI) has also remained at the neutral level of 55. Therefore, the pair will possibly remain at the current range during the American session.

XAU/USD

The XAU/USD pair rose to an intraday high of 1,950, which is the highest it has been since November 6. On the hourly chart, this price is substantially higher than the short, medium, and long term moving averages. The Relative Strength Index (RSI) has also moved back to the overbought level. The signal and main lines of the MACD are above the neutral line. Therefore, the pair will possibly continue rising as bulls aim for the next resistance at 2,000.