Fundamentals to lead the day

The USD edged lower against its counterparts yesterday as market worries for the demand side of the US economy tended to intensify. Worries became obvious on Friday with the release of the UoM Consumer sentiment indicator for February showing an unexpected drop implying a more pessimistic outlook on behalf of the average US consumer. Yesterday we got the U.S. Conference Board’s consumer sentiment for the same month which also dropped beyond expectations intensifying the market’s worries for the willingness of US consumers to spend more in the US economy in the coming months.  Should the demand side of the US economy weaken it could slow down the growth of the US economy. It’s characteristic how US Treasury Secretary Bessent,  stated on Tuesday that the US economy is more fragile under the surface than what economic metrics suggest. On a fundamental level, Trump’s plans for tariffs shake the markets, as the US Government may apply tariffs also on copper imports and should market worries intensify over the issue, safe haven inflows could support the greenback.

The USD index reached two month low levels yesterday as it aimed for the 105.45 (S1) support line. We tend to maintain our bearish outlook for the pair as long as the downward trendline guiding the index since the 3  of February remains intact. We also note that the RSI indicator remains between the readings of 50 and 30, despite a correction higher in today’s Asian session, implying the continuance of a bearish predisposition of the market for the index. Should the bears continue to lead the USD index we may see it breaking the 105.45 (S1) support line and thus open the gates for the 101.90 (S2) support level. Should the bulls take over, we may see the index reversing direction by initially breaking the prementioned downward trendline, signaling an interruption of the downward movement, and aiming if not breaking the 109.30 (R1) resistance line, while even higher we note the 111.50 (R2) resistance barrier.  

On the commodities front, oil prices tumbled yesterday, as weak financial data from the US and Germany tended to intensify worries for the demand side of the international oil market. On the other hand API reported a drawdown in US oil inventories implying a possibly tighter oil market than expected. We note the release of the EIA weekly US oil inventories figure later today and should the decrease reported by API be verified, we may see some support for oil prices. Yet in general the peace prospects in Ukraine, the weaker oil demand expectations and the possibility of increased supply in the international oil markets tend to weigh oil prices. Lastly as for commodities, despite being unrelated to oil as such, we would note US President Trump’s expectations for a deal to be signed on Friday with Ukrainian President Zelensky for a joint development to Ukraine’s  rare earth minerals and other natural resources, which would provide practically access for the US to Ukraine’s resources.

WTI’s price tumbled yesterday nearing the 66.80 (S1) support line. We note how the bearish tendencies for the commodity’s price action have intensified after yesterday’s drop. Also the RSI indicator has dropped and now is between the readings of 30 and 50, implying a bearish sentiment of market participants for WTI. Should the bears maintain control over WTI’s price, we may see it breaking the 66.80 (S1) support line and if so pave the way for the 61.65 (S2) support level. Should the bulls take over, we may see WTI’s price reversing the losses since the start of the week and breaking the 72.20 (R1) support line and start aiming for the 77.85 (R2) resistance barrier.     

دیگر نکات مهم امروز:

Today we get Germany’s Gfk Consumer sentiment indicator for March. Also Richmond Fed President Barkin, BoE MPC member Dhingra and RBA’s Plumb are scheduled to speak. In tomorrow’s Asian session, we note the release of Australia’s CapEx rate for Q4.

USD Index Daily Chart

• Support: 105.45 (S1), 101.90 (S2), 99.30 (S3)
• Resistance: 109.30 (R1), 111.50 (R2), 114.70 (R3)

WTI Daily Chart

• Support: 66.80 (S1), 61.65 (S2), 57.30 (S3)
• Resistance: 72.20 (R1), 77.85 (R2), 82.10 (R3)

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