American stocks declined sharply on Tuesday after relatively weak results from some of the biggest companies in the US. For example, Goldman Sachs reported that its total earnings declined by 13% while its revenue fell by 6%. The weak results came a few days after JP Morgan and Citigroup published weak earnings as their costs rose. Stocks also declined after US bond yields rose to the highest level in over two years, signaling that investors are still worried about the rising interest rates. One of the biggest movers in Wall Street was Activision Blizzard. The stock jumped sharply after being acquired by Microsoft in a $68 billion deal.
The price of crude oil maintained its bullish trend on Tuesday as investors remained optimistic that demand growth will be stronger than supplies. Recent data by the Energy Information Administration (EIA) showed that inventories have declined in the past 7 weeks straight. The EIA will publish the latest inventories data later today. At the same time, more countries have reopened, meaning that demand will continue being strong. Oil prices also surged as geopolitical risks rose in the Middle East. Houthi rebels attacked Abu Dhabi, the third-biggest producer in OPEC.
The economic calendar will have several important events today. In the UK, the Office of National Statistics will publish the latest consumer price index (CPI) data. Economists expect the data to show that prices jumped by 5.2% in December. Excluding food and energy prices, they expect the data to show that the country’s inflation rose to 3.9%. These numbers will come a day after the ONS published strong jobs numbers. The next key data to watch will be the latest Canadian consumer inflation data. As in other countries, analysts expect the numbers to show that inflation rose to 3.5%.
XTIUSD
The XTIUSD pair has been in a strong bullish trend in the past few months. It has managed to rise from a low of 62.15 in December to the current 84.70. On the daily chart, the pair moved above the 25-day and 50-day moving averages. The Relative Strength Index (RSI) is approaching its oversold level while the accumulation and distribution indicator has kept rising. Therefore, the pair will likely keep rising as bulls target the key resistance at 86.
EURUSD
The EURUSD declined sharply in the overnight session as US bond yields rose. It declined to a low of 1.1350, which was significantly lower than last week’s high of 1.1485. The price is approaching its ascending trendline shown in yellow. It has also moved slightly below the 25-day and 50-day moving average and the dots of the Parabolic SAR. Therefore, the pair will likely keep falling as bears target the key support at 1.1300.
GBPUSD
The GBPUSD pair continued its bearish trend after strong UK jobs numbers. It is trading at 1.3518, which was the lowest level in weeks. It has crossed the 23.6% Fibonacci retracement level on the four-hour chart. It has also moved below the 25-day and 50-day moving averages while oscillators have been falling. Therefore, the pair will likely keep falling, with the next key support being at the 38.2% retracement level at 1.3525.
