US dollar takes a breather as US coronavirus cases jump
The US dollar index declined slightly as traders reflected on the surging coronavirus cases in the United States. The government confirmed more than 39,000 infections yesterday, which was the highest daily tally on record. In another statement, the CDC warned that the current tally was not accurate. Instead, the agency predicted that more than 20 million Americans had the virus. Unfortunately, the number of cases is rising in most states, with California, Texas, and Florida being the worst affected. As a result, Texas halted its reopening plan and other states could follow.
The euro was little changed against peer currencies as Christine Lagarde warned about the recovery. She said that the bloc’s economy will be restrained as more people refocus on saving instead of spending. Indeed, data released by the bank showed that household savings rose by more than 214 billion between February and March. They now stand at a record high of 7.3 trillion. At the same time, bank loans in the region have jumped to the highest level since the euro was created. Meanwhile, data from Spain showed that retail sales dropped by 19.0% YOY in May after dropping by 31.5% in the previous month.
Global stocks were mixed today as investors reacted to rising US coronavirus cases. In Europe, stocks were in the green, with the DAX index and FTSE gaining by 0.60% and 1.40% respectively. In the US, futures pointed to a lower open, with the Dow Jones and Nasdaq falling by 0.50% and 0.10% respectively. These stocks are also reacting to disappointing earnings by Nike and the results of the Fed’s stress test. In its results, Nike said that its sales dropped by 38% to $6.31 billion. The company also reported a $790 million loss as it was forced to close most of its stores. Meanwhile, the Fed asked US banks to halt dividends and share repurchases.
The EUR/USD pair is trading at 1.1215, which is slightly higher than this week’s low of 1.1191. On the four-hour chart, the price is slightly below the 50-day and 100-day exponential moving averages. It is also between the 23.6% and 38.2% Fibonacci retracement level. The pair may continue falling as bears attempt to retest the important support at 1.1165.
The GBP/USD pair is trading at 1.2389, which is the lowest level since June 22. On the four-hour chart, the price is below the short and medium-term moving averages while the RSI has been declining. Also, the decline is supported by the descending blue trendline. The signal and histogram of the MACD is also below the price, which means that the price may continue falling as bears target the next support at 1.2330.
The FTSE 100 index rose to an intraday high of £6262. On the four-hour chart, the price is above the 50-day and 100-day EMA while the RSI has been rising. The Relative Vigour Index (RVI) has also been rising. The index may continue rising as bulls target the next resistance at £6,300. However, a move below 6,100 will invalidate the bullish thesis. This is an important psychological level that is also slightly above the lowest level in June.