Dollar maintains gains after positive data release
The US dollar continued to keep the bullish momentum intact. The latest economic report from the United States showed that factory orders beat estimates, rising 1.8% on the month. The data beat estimates of a 0.7% increase. However, previous month’s report was revised down to show a 1.2% decline.
Eurozone Producer Prices Stays Flat in January
The latest producer prices data for the eurozone showed an unchanged print for January. The data was below estimates of a 0.1% increase and down from a revised 0.1% increase in December. Meanwhile, in a separate report, Italy’s preliminary inflation data saw a 0.2% increase, beating estimates of a 0.2% decline.
EURUSD Keeps the Downtrend Intact
The common currency continues to maintain a bearish outlook. Price action remains poised for a test of the lower support level at 1.1000. However, price needs to close below 1.1021 low to confirm this. A reversal above this price point could signal a higher high in price and potentially renew a price correction.
UK Construction Rises in January
Growth in the construction sector in the UK was stronger in January. Data from IHS Markit showed that construction activity rose from 44.4 in December to 48.4 in January. The data comes on the back of the manufacturing sector also posting a strong rebound during the month. Sterling, however, remains muted to the economic data amid the Brexit negotiations.
GBPUSD Bounces off Support – But Will it Hold?
The cable drifted down to briefly test the 1.2960 level of support. But prices were rejected quickly leading to a modest bound in price. A firm test of this support level could build the basis for an upside bias. Therefore, there is a risk of a decline back to this level. Alternately, if the rebound holds, then we expect a move back to the 1.3100 level.
Gold Prices Slip on Rising Risk Sentiment
The gains in the equity markets put the price of gold in check. The precious metal is falling for the second consecutive day. Despite investor concerns of the impact of Coronavirus, equities are holding on to the gains. The declines also come amid the USD trading stronger on the back of positive economic reports.
XAUUSD Could Test Support at 1534
The precious metal maintains a bearish outlook. Price action is likely to slide toward the 1534 level of support initially. In the short term, the price level at 1561 could be tested from the downside. If resistance holds, then we anticipate further declines lower, on a break below the 1534 level.