USD continues to be soft

The USD continued to be soft against a number of its counterparts as it remained near two-week low levels against a number of its counterparts. The story for the US economy outperforming market expectations with a quicker than expected rebound, seems to be losing steam and the markets allow for the greenback to weaken again. Analysts tend to note that the US financial data will have to back up the market’s expectations for a quick recovery, hence we may see this week’s financial releases gaining on importance, as the markets scrutinize data in order to verify the recovery of the US economy. At the same time, it should be noted that the US vaccination program is still ongoing and continues to raise hopes for such a return to normality. Should worries for the rebound of the US economy intensify we may see the USD losing ground.
The USD index dropped on Friday after unsuccessfully trying to break the 90.55 (R1) resistance line. We tend to maintain a bearish outlook for the Index, given that the drop seems to be ongoing despite some hesitation in the American session. Also, it should be noted that the RSI below our 4-hour chart is below the reading of 50, with a downward slope, supporting such a bearish view currently. If the bears actually maintain control, we may see it aiming if not breaking the 89.92 (S1) support line, which reversed the Dollar’s drop on the 13th of January. If the bulls take charge, the index could break the 90.55 (R1) line and aim for the 91.07 (R2) hurdle.

WTI prices on the rise

Oil prices tended to be on the rise during today’s Asian session, after renewed buying interest was displayed by the markets. Tensions in the Middle East also increased worries for the supply side of oil boosting the bullish sentiment for the commodity. Particularly it was reported that a drone packed with explosives was intercepted by Saudi affiliated forces in Yemen, which is assumed to have been heading for Saudi Arabian oil facilities. For the time being it seems like a one-off case, and if so, the influence of the news could start fading away yet that remains to be seen. Also, the statements made by Russia’s Energy minister Novak, that the oil market is on a recovery path created some optimism for the demand side as the pickup of economic activity is expected to raise the oil consumption levels. Should fundamentals on both sides, demand and supply as described, continue to affect the markets we may see black gold’s prices rising further.
WTI prices jumped yesterday, breaking the 59.65 (S1) resistance line, now turned to support. We maintain a bullish outlook for the commodity’s prices, yet as the RSI indicator below our 4-hour chart has surpassed the reading of 70, which confirms the bulls dominance, yet may also imply that the commodity is overbought and a correction lower is imminent. Should a correction lower actually be expressed and extended we may see WTI prices breaking the 59.65 (S1) support line aiming for lower grounds. Otherwise, should the buying interest be renewed, WTI prices could break the 61.15 (R1) line and aim for the 63.00 (R2) resistance level.

Other economic highlights today and early Tuesday:

Today we note Eurozone’s industrial production for December and the release of Canada’s manufacturing sales, while RBA’s releases the minutes of its last meeting minutes during tomorrow’s Asian session.

As for the rest of the week

On Tuesday, we get Germany’s ZEW indicators for February and Eurozone’s GDP rates for Q4. On Wednesday, we note Japan’s Machinery orders for December and trade balance for January, UK’s CPI rates for January, the US retail sales for January, Canada’s CPI rates for January, the US industrial production for January and the Fed releases the minutes of its last meeting. On Thursday, we get Australia’s employment data for January, Turkey’s CBRT interest rate decision, the US weekly initial jobless claims and Eurozone’s preliminary consumer confidence for February. On Friday, we get Australia’s, Japan’s, Germany’s France’s Eurozone’s, UK’s and the US preliminary PMIs for February, Japan’s CPI rates for January, Australia’s and UK retail sales for January and Canada’s retail sales for December.

USD Index H4 Chart

Support: 89.92 (S1), 89.40 (S2), 88.95 (S3)

Resistance: 90.55 (R1), 91.07 (R2), 91.65 (R3)

WTI H4 Chart

Support: 59.65 (S1), 57.75 (S2), 56.00 (S3)

Resistance: 61.15 (R1), 63.00 (R2), 65.40 (R3)

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