The price of crude oil jumped yesterday as traders looked ahead to the upcoming OPEC meeting, which will be held in June. After the recent sell-off, investors believe that OPEC will cut supplies or retain the current production levels to avoid further declines in price. In recent weeks, the price of crude has dropped sharply as investors worried about the impact of the trade war and increasing US production.
The euro declined in overnight trading after the results of the European elections. This happened as France and Germany clashed over the leader of the Union. Nationalist, liberals, and green parties across the EU gained seats at the expense of centrists like Merkel’s CDU. In a statement yesterday, Emmanuel Macron said that the European Commission should have a ‘president candidate who can build a robust majority way beyond partisan lines.’ This was meant to alienate Manfred Weber, who has been backed by Germany. Pascal Canfin said that Weber was ‘totally disqualified today’ following the elections. In the coming days, the bickering will continue as the different countries decide on the future leadership of the region. Today, traders will receive the Germany import data and the sentiment survey results.
Sterling was relatively unchanged in the Asian session. This is as traders think about who the next Prime Minister will be. Most investors expect that Boris Johnson, the former London Mayor and Foreign Secretary will take the lead. If he does, they expect that it will raise the chances of a no-deal Brexit. In the past, he has said that he did not see an issue with the country leaving Europe without a deal. A report by the BOE a few months ago that leaving without a deal would lead to a 9% decline in the country’s GDP.
EUR/USD
The EUR/USD pair declined slightly as conflicts happened about the future leaders of the European Union. The pair is now trading at 1.1182, which was along the 50% Fibonacci Retracement level. On the chart below, this price is along the lower line of the Bollinger Bands while the accumulation/distribution indicator has been falling. The pair will likely retest the 38.2% Fibonacci level of 1.1160 and then resume the upward trend.
GBP/USD
The GBP/USD pair was relatively unmoved as traders continued to think about the next Prime Minister. The pair is now trading at 1.2670 level. On the six-hour chart, the price appears to be headed to the previous low of 1.2600. It is also slightly below the 50-day and 25-day moving averages. If the price retests the previous low, it may accelerate the downward trend to test the next support of 1.2550.
XTI/USD
Yesterday, the price of WTI crude rose sharply as traders focused on the next actions by OPEC. In the Asian session, the XTI/USD pair was relatively unmoved. On the hourly chart below, the pair is trading at 59.08, which is slightly above the 23.6% Fibonacci Retracement level. The price is along the upper line of the Bollinger Bands while the signal line of the MACD is moving up. The pair will likely test the 38.2% Fibonacci level of 59.80.
