US equities were mixed in the overnight session as investors reacted to the testimony by Jerome Powell, the Federal Reserve chair. The Dow Jones and S&P 500 indices declined by about 0.25% while the Nasdaq 100 turned positive. In his testimony, the chair said that the Fed was committed to ensure that elevated levels of inflation do not become entrenched. He committed to use the bank’s tool to deal with inflation. Later today, the US will publish the latest inflation numbers, which are expected to show that the headline consumer price index jumped to about 7% in December while core CPI rose to 5.7%. The Fed will also publish its Beige Book later today.
The price of crude oil held steady in the overnight session as investors continued to focus on global demand and supply. Analysts believe that demand will rise at a faster pace than supply this year. Last week, OPEC+ members decided to continue with their planned 400k barrels per day increases in February. At the same time, global demand is expected to rise as more countries reopen. Later today, the Energy Information Administration (EIA) will publish the latest inventories numbers. Economists polled by Reuters expect the data to show that inventories declined by over 1.9 million barrels last week after falling by 2.14 million in the previous week.
The economic calendar will have no other major events today. Earlier today, data by the Chinese statistics agency revealed that inflation held steady in December. Later today, Eurostat will publish the latest industrial production numbers. Economists expect the data to show that industrial production eased from 3.3% in October to 0.6% because of the Omicron variant. Investors will also be focusing on the upcoming earnings season that will kick off officially on Friday. Before then, companies like Delta Airlines, Jefferies, and KB Home will publish their results.
XTIUSD
The West Texas crude oil price rose to a high of 79.20, which was the highest level since January 3rd. On the four-hour chart, the pair moved slightly above the 25-day moving average and the dots of the Parabolic SAR. The Relative Strength Index (RSI) has moved slightly above the neutral level at 61. The accumulation and distribution line has also continued rising. Therefore, the pair will likely keep rising as bulls target the key resistance at 81.
EURJPY
The EURJPY pair held steady ahead of the latest Eurozone industrial production data. The pair is trading at 130.95, which is slightly below this year’s high of 131.60. It also moved slightly above the 25-day and 50-day moving averages while the Relative Strength Index is at 52 and pointing upwards. It has also formed a small rising wedge pattern, meaning that the pair will likely resume the bearish trend in the near term.
EURUSD
The EURUSD pair moved sideways as Jerome Powell testified on Tuesday. The pair is trading at 1.1338, which was slightly above Tuesday’s low of 1.1310. The pair is still at the same point as the 25-day moving average and slightly below the important resistance at 1.1362. The Average True Range (ATR) has pointed upwards even though the pair has been in a tight range recently. Therefore, the pair will likely remain in this range ahead of the American inflation data.
