Wall Street ended the day yesterday sharply lower as investors worried about a number of things such as global growth, Fed interest rates, and corporate profits. This decline drove Wall Street deeper into the correction territory started on Friday. In response to the slide, Asian stocks dropped today with the Nikkei, Shanghai, and Hang Seng dropping by 360, 30, and 250 points respectively. This volatility is likely to continue as the Fed starts its meeting. In recent days, a number of high-profile individuals like Donald Trump, Jeffrey Gundlach, and Stanley Druckenmiller have cautioned the Fed against further rate hikes.
The price of crude oil declined sharply in overnight amid worries over demand and oversupply. This came after some moderate gains yesterday as investors started to cheer the falling rigs in the US. The price of Brent reached a low of $58 while WTI reached a low of $49.30. Traders will now focus on inventory data set to be released tomorrow by API and EIA.
Sterling moved slightly higher in overnight trading despite increasing Brexit fears. Research by the British Chamber of Commerce showed that the country will have the weakest growth since the last recession. This year, the chamber estimated that the economy will grow by 1.2% before moving up to 1.3% in 2019. This will be the weakest growth since the country emerged from the global financial crisis. The reason for the soft growth is that businesses have frozen investments ahead of the Brexit vote. This came as Jeremy Corbyn tabled a motion of no-confidence in Theresa May yesterday.
EUR/USD
The EUR/USD paused its upward trend in the Asian session. This comes after the sharp increase that started on Friday when the pair reached a low of 1.1270. Today, the pair is trading at 1.1350, which is slightly lower than yesterday’s high of 1.1360. The current price is above the 25-day and 50-day EMA on the hourly chart. The pair’s RSI has remained between the 50 and 60 level for the past trading days. Still, this upward trend might not last as traders wait for the Fed decision tomorrow.
XTI/USD
The price of WTI crude oil declined sharply to a low of $49.30. This was the lowest level in a few weeks and is close to the lowest level this year. On the hourly chart, the price is below the 25-day and 50-day EMA. The RSI has moved to the extreme oversold territory of 23 while the momentum indicator has fallen to the lowest level since December 6. The pair will likely remain at these levels as traders wait for inventory data tomorrow.
GBP/USD
The GBP/USD pair moved to a high of 1.2648 as it tried to reach the important resistance level of 1.2670. The current price is slightly below the 25-day EMA. With the trend being driven by low volumes, there is a likelihood that it will not last. Therefore, the price could continue declining as traders continue to worry about the weak growth.
