US futures rose in overnight trading after US lawmakers agreed, in principle, on funding border security. This was a culmination of weeks of negotiations in which the lawmakers wanted to avoid another government shutdown on Saturday. Even with the progress, there is a possibility that Donald Trump will reject the proposals. He has asked for $5.7 billion in border security. However, the current deal is in the range of $1.3 billion and $2 billion. This is less than half of what the President needs.
The US dollar rallied to the highest level this year. Today, the dollar index is in the ninth straight day of gains. The index measures the performance of the USD with that of a basket of currencies like the euro, yen and sterling. The reason for this is that while the Fed has halted further rate hikes, the US economy is doing better than that of its peers. The European Union’s economy is weakening while that of Japan is not strong either. The UK economy on the other hand is going through challenges of slow growth, which is compounded by the uncertainties brought about by Brexit.
Asia-Pacific stocks rose as investors grew optimistic about the current round of talks between the US and China. US officials are currently in Beijing, negotiating a deal as the March 1 deadline nears. In China, the Shanghai composite and Hang Seng rose by 0.75% and 0.20% while in Japan, the Nikkei rose by 2.60%. In Australia and New Zealand, the ASX 200 and DJ New Zealand index rose by 0.35% and 1% respectively.
In the US session yesterday, the EUR/USD pair declined sharply, crossing the important support of 1.1290. The pair reached an intraday low of 1.1265, which was the lowest level since November last year. On the four-hour chart, the price is still below the 25 and 50-day EMA while the momentum indicator remains below the 100 level. The RSI is trading along the oversold level of 70. Therefore, while the pair could continue moving lower, there is a likelihood that it will make a short-term reversal.
The GBP/USD pair continued the downward trend as traders waited for more guidance on Brexit. The pair is now trading at 1.2845, which is the lowest level since January 23. On the hourly chart, the price is below the 14-day and 28-day EMA while the RSI has moved closer to the oversold level. The Parabolic SAR points to more downward movements. There is a possibility that the pair will continue moving lower today.
The USD/JPY pair continued the upward trend started in December. The pair reached a high of 110.65, which is the highest level since December 28. On the hourly chart, the pair is above the 14-day and 28-day EMAs while the RSI has moved to almost the 70 level. The momentum indicator has moved above the 100 level. The pair will likely maintain the upward trajectory.