USD continued to weaken against a number of its counterparts yesterday, as worries about a possible rate cut by the Fed continued to dominate the currency’s direction. Fed’s Chair Powell yesterday stated that the bank will respond appropriately to trade pressure, hence dropping his line of the bank being patient. It would be indicative of the market having priced in a number of negative scenarios that the USD did not react substantially to Powell’s comments. Analysts tend to note that central banks around the globe, are adopting a dovish tone, which could be part of a pre-emptive strike, implying that the global economic outlook has worsened. Should the current uncertainty continue, we could see the USD weakening even further, yet we would not be surprised to see the market pricing in the news and the USD stabilising in the next days. EUR/USD continued to rise yesterday testing and temporarily breaking the 1.1260 (S1) resistance line (now turned to support). For us to switch our bullish outlook in favor of a sideways scenario, we would require a clear breaking of the upward trendline, incepted since Friday the 31st of May. Please note that the RSI indicator in the 4 hour chart continues to advise caution, as it remains above the reading of 70, implying an overcrowded long position for the pair. Should the bulls continue to dictate the pair’s direction, we could see it aiming for the 1.1300 (R1) resistance line. On the flip side should the bears take over, we could see the pair breaking the 1.1260 (S1) support line and aim for the 1.1220 (S2) support barrier.
WTI remains rather stable, despite US inventories rise
WTI prices showed little reaction, despite the US API weekly inventories figure showing a rather unexpected injection to US oil reserves. Analysts tend to point out that the release was a quite bearish number for the oil market and should it be confirmed by today’s EIA inventories figure could weaken oil prices. It should be noted that oil prices dropped heavily over the past few days as worries about a global slowdown increased, while US production has reached record levels. OPEC on the other hand has been withholding production, yet the head of Rosneft, Igor Sechin, said Russia should pump at will, indicating tendencies to increase production levels. WTI prices maintained a sideways motion between the 52.70 (S1) support line and the 54.45 (R1) resistance line. We could see the pair maintaining a sideways motion today, yet the release of the EIA crude oil inventories could affect oil prices during the American session. Should the commodity come under the selling interest of the market, we could see it braking the 52.70 (S1) support line and aim for the 51.25 (S2) support level. Should WTI long positions be favored by the market, we could see its prices rising, breaking the 54.45 (R1) resistance line and aim for higher grounds.
Other economic highlights, today and early tomorrow
Today during the European session we get UK’s services PMI for May and Eurozone’s PPI and retail sales growth rates, both for April. In the American session we get the US ADP National Employment figure for May, the ISM non-manufacturing PMI for May and the release of EIA’s weekly crude oil inventories figure. In tomorrow’s Asian session we get the Australian trade balance figure for April. As for speakers BoE’s Ramsden, Chicago fed President Charles Evans, Fed’s Richard Clarida, Atlanta Fed President Raphael Bostic, Fed’s Michelle Bowman and Boston Fed President Eric Rosengren speak.
WTI H4
Support: 52.70 (S1), 51.25 (S2), 49.50 (S3)
Resistance: 54.45 (R1), 56.00 (R2), 57.75 (R3)
EUR/USD H4
Support: 1.1260 (S1), 1.1220 (S2), 1.1175 (S3)
Resistance: 1.1300 (R1), 1.1340 (R2), 1.1375 (R3)
