USD remains weak as recovery doubts seem to persist

USD’s retreat continued yesterday against a number of its counterparts, as the doubts and worries for the recovery of the US economy seem to persist. On the other hand, it should be noted that US stockmarkets were on the rise, reaching record highs fuelled by market expectations for a more generous fiscal stimulus, near Biden’s pledge for $1.9 trillion and hopes seem to be high. At the same time the roll-out of vaccines seems to be progressing at a fast pace creating some hopes for a quicker return to normality and support for the economic recovery of the US. In the US fundamentals we expect former President Trump’s 2nd impeachment trial, which is to begin today in the US Senate to catch the headlines, yet at the same time may have little effect for the markets. The political significance of the trial seems to culminate to whether Trump will or will not be allowed to rerun for office in the future, yet Democrats seem to lack the necessary votes in the Senate to get a conviction. Given the low number of US Financial releases we may see fundamentals taking the lead and defining today’s sentiment.
Dow Jones continued to rise yesterday opening with a positive gap and continued higher, breaking the 31250 (S1) resistance line, now turned to support. We maintain a bullish outlook for the index, as long as its price action remains above the upward trendline incepted since the 4th of February. On the other hand, it should be noted that the index has reached new record high levels and may find it difficult to maintain its upward movement. Nevertheless, should the index find fresh buying orders along its path we may see it aiming for the Also it should be noted that the 31640 (R1) resistance level. Should a selling interest be displayed by the markets, we may see the index breaking the prementioned upward trendline, the 31250 (S1) support line and start aiming for the 30950 (S2) level.

WTI’s steep ascent is being maintained

WTI prices were on the rise yesterday gaining around 2% and have reached the highest levels seen in over a year. Expectations for a higher degree of economic activity worldwide tended to fuel oil’s prices even higher especially given that the roll out of vaccines is ongoing. As the number of daily infections seems to continue to drop and the amount of vaccines being distributed increases, the until now capped demand side of the economy is to be released and more and more people may start travelling and gathering, thus a return in demand for oil may be imminent. On the other hand, it should be noted that production cuts by some major oil producing countries tend to keep the supply side tight boosting oil prices. Should market expectations for the improvement of economic activity be maintained we may see oil prices continue to be on the rise, while oil traders may be keeping a close eye also on the release of the US API weekly crude oil inventories figure. WTI prices continued to rise yesterday, breaking the 57.75 (S1) resistance line, now turned to support and reached new one year high levels. Technically, we maintain a bullish outlook for the commodity’s prices as long as it remains above the upward trendline incepted since the first of February. It should be noted though that the RSI indicator below our 4-hour chart has surpassed the reading of 70, confirming the bull’s dominance, yet at the same time may imply that the commodity’s long position may be somewhat overcrowded and some buyers may want to book some profits by closing their positions. Should the bulls maintain control over WTI’s prices, we may see it aiming if not breaking the 59.65 (R1) resistance line. Should the bears take over, we may see the commodity’s prices breaking the prementioned upward trendline and the 57.75 (S1) support line, thus paving the way for the 56.00 (S2) support level.

Other economic highlights

Today we note Germany’s trade data for December, and later from the US the JOLTS job openings for December. Also, from China we note January’s inflation measures, Japan’s corporate goods prices for January and Australia’s Consumer Sentiment for February.

US 30 Cash H1 Chart

Support: 31250 (S1), 30950 (S2), 30650 (S3)

Resistance: 31640 (R1), 32000 (R2), 32300 (R3)

WTI H4 Chart

Support: 57.75 (S1), 56.00 (S2), 54.20 (S3)v

Resistance: 59.65 (R1), 61.15 (R2), 63.00 (R3)

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