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Trump pushes oil price lower Brent crude made another failed attempt the challenge the $78 immediate resistance which attracts profit-taking this week. Crude oil markets look rather stable in a wider picture, while short-term charts highlight the nervous behavior of traders lately. One of the reasons behind the mixed dynamics in prices and the lack of bullish impetus are Trump’s tweets on the oil market. This time, the US leader demanded that OPEC reduce prices for crude. The aggressive US pressure on the cartel erodes the incentives for bulls to push oil price higher as there are increasing concerns that the group of producers will intensify their efforts in increasing output on the back of global markets rebalancing. On the other hand, Brent stays relatively afloat not far from 3.5-year highs due to supply concerns amid the declining production in Venezuela and the upcoming US sanctions on Iranian crude exports. In the short-term, traders will focus on fresh weekly numbers from EIA. Should the report point to further decline in inventories and the continuing pause in shale production, prices could stage a local recovery and get back above $78. But in a wider picture, Brent remains vulnerable amid the rising OPEC production.
TVC:UKOIL
by HelenRush
USD looks for a boost from FOMC minutes The greenback is attempting to regain ground Wednesday, showing mixed dynamics against major rivals. The overall sentiment around the greenback remains rather muted this week as traders are cautious ahead of the key events – the FOMC meeting minutes and NFP employment report on Thursday and Friday respectively. The EURUSD pair failed to make a clear break above the 20-DMA and remained below the key 1.17 barrier. The price has resumed the downside move today, with stronger-than expected euro zone service PMI haven’t provided a bullish boost to the pair. This confirms that the general USD sentiment remains the main driver for the pair for the time being. The downside pressure on the euro could increase should the release of minutes of the Federal Reserve’s June 12-13 policy meeting provide further hawkish clues. The risk for the dollar is the potentially more cautious tone by the Fed amid the escalating trade tensions between the US and its trading partners. The base case scenario implies that EURUSD will further lose ground by the end if this week and derail the 1.16 support once again.
by HelenRush
Brent crude targets $80 again Following yesterday’s correction, Brent crude has resumed the ascent and targets the recent highs once again as the price received a local psychological support in the $77 area on Monday. The immediate upside target comes at $78, and a break above will open the way to $80. The reason behind the rebound were the reports that Libya’s National Oil Corporation declared force majeure on substantial volumes of its supply from two major ports, resulting in total production losses of 850,000 bpd. This adds to market concerns over global supply shortage and adds to the bullish pressure on prices. On the other hand, OPEC production increase continues to drag on the markets. Against this background, traders will pay close attention to US inventory and production data this week. Should the stockpiles continue to decline, Brent will receive the additional impetus amid the lingering supply concerns. In the best case scenario, prices will retest the $74.50 and will challenge the key $80 level. However, Brent will need additional support for a sustained break above this psychological mark.
TVC:UKOIL
by HelenRush
EURUSD: risks from Germany persist The euro received a boost on Friday after the EU leaders reached an agreement over the migration issue. The EURUSD rallied but failed to challenge the 1.17 local resistance. The bullish impetus turned out very short term and unsustainable as the situation in Germany remains unresolved, so the pair is losing ground on Monday, remaining above 1.16 so far. Merkel’s coalition is at risk of collapse as the Chancellor’s conservative allies rejected the recent EU migration deal. Against the backdrop of further political crisis escalation in the largest euro zone economy, the euro’s attractiveness is decreasing. Meanwhile, the persistent bullish trend in USD only adds to the pressure. And this week’s FOMC meeting minutes due on Thursday could further undermine the single currency’s positions should the Fed sound hawkish. The technicals point at a neutral stance in the EURUSD for now. The price needs a sustainable break above the 20-DMA at 1.1670 and then a recovery above the 1.17 threshold in order to shrug off some pressure from USD bulls. On the other hand, as long as the pair holds above the 1.15 key support, there is a chance for a rebound above the mentioned levels after the German risks ebb.
by HelenRush
Brent: supply concerns drive prices higher Brent crude has been testing the $78 level once again as the lingering global supply concerns continue to fuel oil demand this week. The price targets the $80 threshold, trending north for a sixth day in a row. However, the risk of profit-taking is rather high at this stage as the positive drivers have been largely priced in already. Market participants continue to wonder how much barrels will disappear from the global market as a result of supply cuts in Venezuela and Iran. On the other hand, trade-war fears have been limiting the bullish potential of oil prices as further escalation of the trade conflict between the US and China could derail global growth and oil demand in the longer term. Technically, a daily close above $78 will open the way to further gains, but traders may opt to take profit at attractive levels ahead of the weekend and drive Brent lower from current monthly highs. The immediate meaningful support comes around $77.40. Baker Hughes data won’t affect the price dynamics much, unless the number of oil rigs drops or rises dramatically.
TVC:UKOIL
by HelenRush
GBPUSD continues to lose ground GBPUSD has been trading under an intense bearish pressure this week, with the pair failed to keep above the 1.31 threshold on Thursday and slipped to fresh mid-November lows around 1.3065. The price has partially recovered since, but remains weak and vulnerable to further losses. Month-end, quarter-end, and half-year-end flows support the greenback across the board, and this only exacerbates the bearish drivers for the pound which continues to bleed amid Brexit uncertainty. In this context, the pair suffered another wave of profit taking ahead of the two-day EU summit starting today, where the “divorce” details will be negotiated. The buck also attracts buying interest amid trade-war worries as European currencies fall the victims of risk aversion against the nervous environment. The short-term GBPUSD dynamics will depend on Brexit developments during the summit, but the key driving force is still the dollar. The greenback will likely remain on the offensive so far, so the downside risks for the pound still prevail. Should the risk sentiment doesn’t improve in the nearest future, the pair may challenge the lows of 1.3060 and get down to the next support area at 1.3025.
by HelenRush
USDJPY: downside bias persists The USDJPY pair managed to stage a solid rebound on Tuesday, but failed to make a clear break above the critical 200-DMA and got back below the 110.00 threshold today. The immediate support now comes around 109.50. The dollar still lacks the upside impetus against the yen as the Japanese currency attracts buying interest as a safe haven currency. The trade-war worries still persist in the global markets, which adds to the bearish pressure on the pair. As long as US-China tension continue to escalate, the upside risks for the yen will remain high and the pair will stay vulnerable to further losses even as the USD index looks relatively strong. From the technical point of view, chances for a more sustainable recovery in the short term are rather low as the price faces a strong hurdle in the 110.20 area, where the 14- and 200-DMAs converge. The pair will likely continue to consolidate around 110.00 with a bearish bias in the foreseeable future. The immediate pressure will ease once USDJPY rises above the 110.80 figure.
by HelenRush
EURUSD: dollar regains allure The EURUSD pair has been correcting lower on Tuesday after three days of gains. The price failed to keep above the 1.17 threshold and is getting back below the 20-DMA, down to session lows around the 1.1670 area. The short-term technical picture points to downside risks for the single currency. The dollar regains the positive momentum today, with risk-off sentiment eases as well as demand for Treasuries. Should Trump refrain from new threats and protectionist rhetoric in the nearest future, the risky assets will stage a more pronounced recovery, and the pressure on the greenback will ebb further. Apart from the overall sentiment around the trade conflicts globally, the US economic data will drive the sentiment in the pair in coming days. Market participants will focus on the US GDP numbers on Wednesday, while the PCE data will be the key release. The euro zone CPI report on Friday will also matter for EURUSD. The pair could lose ground should the US figures come in on the stronger side. On the downside, the key is the 1.1530 support area.
by HelenRush
EURUSD: downtrend is intact EURUSD continues its recovery on Friday, with the key reason behind the corrective rebound is the widespread dollar weakness amid a retreat in the 10-year US Treasury yields and a better risk-on tone after the recent sell-off. The pair has reached the 20-DMA just above the 1.1670 area, where the rally has exhausted for the time being. As there are no any fundamentals behind the ongoing ascent in EURUSD except for profit-taking on USD longs, we see the recovery as selling opportunities because the monetary policy divergence theme remains one of the strongest arguments against the euro rise. Moreover, the euro zone economy continues to show signs of a slowdown, and political risks in Italy may yet reemerge just like yesterday. So, despite the pair still looks oversold, it is still attractive for selling on any rallies and could fall to fresh 2018 lows should the dollar bulls get back in the game. The short-term technical picture has improved a bit since yesterday, but in broader terms, the bearish trend remains firmly intact. In the nearest future, the euro may retreat from the mentioned moving average and derail the 1.16 figure once again.
by HelenRush
Will BoE save the pound? GBPUSD has been trading lower on Thursday, at fresh 7-month lows around 1.3125. The pair remains under pressure mainly due to strength in the US dollar which received a boost recently from the hawkish Fed. The pound has lost the important support area 1.3150 and remains vulnerable to further losses. Today, the Bank of England policy meeting will be in focus. The central bank could drive the sterling even lower or open the way to a corrective recovery from oversold territory. Should the regulator confirm that the Q1 growth slowdown was temporary, it will be a bullish sign for the pound. The pair could even rally if Carney shows a greater willingness to hike rates in H2 2018. However, such a scenario is probably too optimistic as the monetary authorities will likely express a more cautious tone. A potentially neutral rhetoric may leave the pound virtually unfazed. But from the technical point of view, the pair has a recovery potential as it has been trading at very attractive levels for the bulls to get into the game. The immediate resistance lies around 1.3180. On the downside, the 1.31 figure is now the key support. A break below will open the way to a deeper downtrend.
by HelenRush
Policy divergence pressures euro EURUSD dipped to late-May lows in the 1.1530 area on Tuesday amid a widespread risk aversion that fuelled the dollar demand. The pair has recovered partially since, but continues to trade with a bearish bias and remains vulnerable to further losses in the short term. Despite the downside pressure on the single currency has eased somehow, and global investors have mostly shrugged off the trade-war fears for now, the downside risks in the pair still persist. The main reason behind the bearish outlook is the monetary policy divergence between the ECB and the Fed. Should the ECB officials confirm the dovish tone today, EURUSD could return to the previous lows and go even lower if Fed’s Powell will sound hawkish. The technicals also point to the downside risks as the tone remains bearish as long as the pair is trading below the 1.18 threshold. The euro needs to get back above this level to regain the upside bias and try to derail the downtrend which remains in place. The immediate support comes at 1.1530.
by HelenRush
USDJPY: the bearish potential is limited The USDJPY pair has accelerated its decline on Tuesday amid the increasing risk-off sentiment as an escalating trade war between the US and China continues to hurt investor enthusiasm. The price dropped from last week’s highs close to the 111.00 mark, down to one-week lows around 109.50. Against the background of widespread risk aversion, the Japanese currency could rise further in the short term, as global markets will likely remain under pressure today, digesting another aggressive signal from the US as Trump has threatened new 10% tariffs on another $200B of Chinese imports. China responded by accusing the US of "blackmail". The obvious signs of a major escalation of the trade dispute boost safe-haven demand. But in the bigger picture, the pair’s downside potential looks rather limited as the greenback remains in a bullish trend fortified by recent Fed’s hawkish rhetoric. So, as soon as the dust settles once again, the price will likely stage a rebound from more attractive levels for buyers. Meanwhile, in the short term, USDJPY may fall further. The immediate downside target comes around the 109.20 area.
by HelenRush
Brent: it’s all about OPEC meeting Crude oil prices are attempting to stage a corrective rebound on Monday after a dip to fresh two-month lows earlier in the day. Brent has extended the recent decline to $72,10 where it received a support and staged a recovery. However, the bullish momentum remains too timid to open the way to a more pronounced rise from the current levels, with the $74 area is the key upside hurdle at this stage. Market participants continue to wonder how aggressively the OPEC+ countries will increase production, and whether the exporters will manage to come to a consensus at all, as the largest producers including Russia and Saudi Arabia call for a rise in output, while some other countries insist on keeping the current quotas unchanged, citing fears of oversupply and another plunge in prices. Against this inconsistent backdrop, Brent will likely remain volatile in the coming days, expecting the cartel’s verdict. Amid a lack of consensus, the bearish risks prevail in the market, and we still could see fresh lows in the nearest future. Should the price challenge the $72 level, the next psychological target of $70 will get into the game.
TVC:UKOIL
by HelenRush
Euro is licking its wounds, remains vulnerable The EURUSD pair nosedived to two-week lows following the dovish ECB statement on Thursday. The price has challenged fresh lows in the 1.1543 area earlier today but faced support and since has recovered some ground. During the early European hours, the euro is attempting to get back above the 1.16 threshold. Despite the pair has stopped bleeding, the euro remains vulnerable as the dovish outlook for rates in the euro zone reduces the appeal of the currency. By the way, following yesterday’s central bank rhetoric, Deutsche Bank pushed back its ECB rate hike forecast to September 2019. This contrasts with the bold tone by the Fed as the regulator now expects for hikes this year instead of three. Against this background, the EURUSD outlook looks more bearish now, and should the incoming euro area and US economic data continue to diverge, the price could deepen its bearish trend, while rallies will likely attract sellers. In the short term, the pair needs to regain the 1.16 mark at least, though it won’t change the overall bearish picture significantly for the time being. The immediate important resistance now comes around 1.17, where the 20-DMA lies.
by HelenRush
EURUSD: what to expect from ECB Today’s ECB meeting will undoubtedly will be a crucial one, despite the regulator isn’t going to bring any actual changes to its current monetary policy. Despite the economic picture in the euro zone doesn’t warrant a hawkish rhetoric, the recent comments by a number of central bank members point to its readiness for QE removing, probably till the end of this year. The euro is prepared for a more aggressive regulator tone, but the question is whether it will be enough to fuel a speculative demand. The buck, for example, failed to stage a rally overnight despite the Fed has brought a so-called hawkish hike. It was in part due to the fact that such an outcome had been priced in already. Therefore, the EURUSD pair could fail to confirm the rebound above the 1.18 threshold and may even suffer a decline as the strategy “buy the rumor, sell the fact” could come into play should the monetary authorities announce the expected QE end date. A spike during the initial reaction may bring the pair above the 1.1840 area.
by HelenRush
Gold: focus on Fed Spot gold remains under a bearish pressure after yesterday’s drop. The yellow metal has been trading below the key $1,300 mark since early-June and still doesn’t show any signs of a sustained recovery as market focus has shifted from geopolitics to the upcoming FOMC meeting. The Fed rhetoric could affect the overall sentiment in the global financial markets and the dollar dynamics as well. Should the regulator hint at four tare hikes this year, the greenback will rise across the board amid growing market expectations. For the precious metal, this scenario would be bearish and could intensify the downside pressure. Gold still looks unattractive for bulls, despite the price has been trading close to 2018 lows. This reflects the market mood as the dollar remains within the uptrend despite its impetus has abated recently. And the potential “hawkish” Fed may fuel the USD demand today. In this case, gold will likely challenge the intermediate support around $1,290 and test the $1,297 level, depending on the degree of the expecte dollar’s bullishness.
TVC:GOLD
by HelenRush
USDJPY needs to confirm recovery The greenback has regained some ground since the start of the week, mostly due to yen’s significant retreat ahead of today’s US-North Korea summit. Trump has described the meeting with Kim as honest, direct and productive, but he highlighted that sanctions on North Korea will remain in effect and noted that the two leaders will probably need a second summit. The dollar continues to trade with a timid bullish bias ahead of the key US CPI data which may affect market expectations ahead of the two-day FOMC meeting that concludes Wednesday. The USD bulls hope that the monetary authorities will hint at a more aggressive tightening this year. Should today’s inflation numbers surprise to the upside, the buck will get support across the board in the short term. The USDJPY pair is trading around the 110.00 mark and needs to confirm a break above this psychological level to proceed with the ongoing recovery. The immediate resistance comes at 110.50, while the key support is around 109.00. The price is currently oscillating close to the 200-DMA marginally above 110.00.
by HelenRush
EURUSD underpinned ahead of ECB meeting The EURUSD pair has regained the bullish impetus on Monday, with the price is testing the 1.18 once again. The euro is underpinned by bullish expectations ahead of this week’s ECB meeting, even as US-EU trade tensions persist. The pair remains above the 20-DMA but will hardly dare to jump to 1.20 and above any time soon as traders will likely be cautious ahead of the two major central banks’ decisions. The ECB is expected to deliver the date of QE end and will also provide its latest forecasts for economic growth and inflation. The risk for the single currency is that the market expectations may already be rather high after the recent signals from the central bank officials. So if Draghi shows a rather cautious rhetoric, the euro may fall the victim of profit taking and give up some of its previous gains. In this case, EURUSD will get back below the 20-DMA at 1.1730 and will derail the 1.17 mark again. But we also should remember that the pair will have to digest the Fed meeting results first, as the dollar is also vulnerable, despite the widely expected rate hike in the US.
by HelenRush
GBPUSD: CPI and BoE intentions in focus The GBPUSD pair is trading marginally lower on Friday, with widespread risk aversion has put the high-yielding currency under some pressure, while the greenback is licking its wounds after a bearish move earlier this week. The price failed to hold above the 1.34 threshold and turned red on the day, challenging the 20-DMA before the opening bell on Wall Street. Meanwhile, the pound was unfazed by some interesting comments by BoE’s Ramsden who noted that persistently high inflation above the 2% target level creates a risk of failure of the MPC to meet its remit. In other words, one of the most cautious BoE members in fact highlighted the need for further rate hike down the road to combat the overshooting CPI. Against this backdrop, next week’s inflation report will be important for GBPUSD as higher consumer prices will drive the sterling north across the board on the back of increase pricing in for an August hike. Therefore, after a corrective retreat, the price could resume the ascent and get back to the 1.35 area.
by HelenRush
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Brent stuck below 20-DMA Crude oil prices have recovered marginally on Wednesday, with Brent managed to keep above the $74,50 area and finished at $75,73. The immediate resistance comes at $76 – a break above will confirm some easing of a downside pressure. However, in the bigger picture, the bearish risks still persist, and the 20-DMA around $77,50 is unlikely to be challenged any time soon. The local rebound was mainly due to the reports that Venezuela is considering force majeure on oil exports. The potential stoppage in deliveries from a major OPEC producer has eased oversupply fears as US officials ask the cartel to increase production. By the way, Saudi Arabia’s Aramco has raised its crude oil prices for Asian buyers to the highest since 2014, citing threats to rival suppliers. This step has also supported Brent. In the short term, the market will likely remain focused on Venezuela but this won’t be enough to alleviate concerns over the possible OPEC production increase amid the non-stop rise of activity in the US shale oilfields. Shale production reached 10.8 million bpd last week, coming closer to the 11 million mark.
TVC:UKOIL
by HelenRush
Euro welcomes ECB QE exit talks EURUSD has appreciated marginally yesterday, with the bullish bias remains intact on Wednesday. The latest rise in the single currency could be attributed to some relief in Italy as the new Prime Minister Conte highlighted that his country has no plans to leave the euro zone. The additional upside pressure came amid ECB QE exit talk. It was reported that the central bank could discuss the end of its quantitative easing program during the next policy meeting next week. Some hawkish comments by ECB members added to bullishness today. In particular, Hansson said higher rates are possible before mid-2019, while Bundesbank head Jens Weidmann expressed hope that inflation to gradually return to levels compatible with target. Against this backdrop, EURUSD jumped to May 23 highs around the 1.1760 area and is attempting to derail the 20-DMA. ECB hopes may drive the pair further north in the short term, but considering the dismal economic numbers from euro area this year, there are no significant arguments for a more aggressive approach to ECB policy normalization. As such, rising expectations on this front may play against the euro bulls eventually as the central bank will hardly sent a clear hawkish signal to the markets during the upcoming meeting.
by HelenRush
EURUSD lacks upward momentum The EURUSD pair staged a marginal recovery on Monday but failed to close above the 1.17 threshold, and the trading looks neutral today. The recent rebound was mainly due to a local dollar weakness as well as the squeeze of euro shorts opened during the Italian political crisis. The market continues to cheer the formation of a new government in the country. However, the political issues in Italy may yet put some pressure on the single currency down the road as the future relationships of the populist government with the EU look uncertain. Moreover, the dollar could regain strength amid the increasing rate hike expectations. Despite the recent US jobs report failed to fuel a rally in the USD, the figures themselves confirm that the economy is rather healthy to withstand a more aggressive tightening by the Fed. Against this backdrop, euro still looks vulnerable to further losses even as the currency shows some recovery signs lately. EURUSD needs a decisive break above 1.17 in order to challenge the 20-DMA in the 1.1750 area. As long as the pair remains below this moving average, the downside risks prevail in the short-term charts.
by HelenRush
USDJPY: dollar sellers may return The USDJPY pair finished the week with only marginal losses as the greenback has trimmed the previous decline on Friday, due to a spectacular US jobs report. The price has refreshed one-week highs in Asia today, but the bullish impetus fails to gain momentum ahead of the 14- and 20-DMAs in the 109.70-109.80 area. Despite the short-term technicals have improved recently, the pair’s upside bias is in question. On the other hand, the US economic figures signal a healthy GDP growth and therefore suggest that the Fed may pick a more aggressive tightening path down the road, which is a bullish factor for the buck. On the other hand, the threat of a trade war between the US and other countries, that has increased over the last few days, point to the prospect of yen buying amid the potential risk aversion in the global markets. Moreover, the BoJ has cut the size of JGBs buying and the market started to price in the upcoming tapering in Japan. As such, the pair may soon switch back into a bearish mode, especially considering the dollar’s inability to make a clear break above the mentioned local resistance that is standing on the way to 110.00.
by HelenRush