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Brent: bullish potential limited Crude oil prices have been rising over the past few sessions with Brent has settled above the $74.50 area. However, the market lacks further upside momentum and the risks of resuming the decline remain. The key immediate obstacle for bulls now comes at $75, with the next upside barrier lies around $75.20, where the 50-DMA lies. The prices were recently supported as US sanctions on Iranian goods come into effect and now traders get more concerned over the upcoming sanctions on Iranian oil due in November. In another sign of bullishness, the API data overnight showed that crude oil stockpiles declined by more than six million barrels last week. Now, investors are eager to see a confirmation of bullish figures from the official report by EIA due later today. Despite the ongoing recovery, the potential for further rise in Brent crude looks limited, and the price shows signs of momentum exhaustion already. The longer the asset remains below the $75 handle, the greater becomes the risk of a downside correction in the short term as the market needs additional catalyst to proceed with the corrective rebound.
TVC:UKOIL
by HelenRush
Pound in the crosshairs GBPUSD is licking its wounds after a drop to 11-month low of 1.2920 on Monday, having recovered above the 1.2960 area. Despite the immediate downside pressure has eased somehow, bearish risks for the pair remain, and the general picture in the weekly charts is still ominous. The British pound came under an intense pressure from two different fronts. First, the USD index remains firmly within a bullish trend and staged a widespread rally yesterday as the buying interest around the dollar increased amid another escalation of US-China trade tensions. The upside pressure has eased since, but the greenback keeps solid positions, so sterling remains on the defensive. Second, the threat of a no-deal Brexit is rising, especially after the UK officials mentioned the increasing probability of a so-called ‘hard” Brexit. As such a divorce scenario has not been fully priced in, there is still a downside risk for the pound from this factor. Against this background, GBBPUSD still looks attractive for selling on rallies. Only above the 20-DMA at 1.31, the downside pressure will ease more substantially.
by HelenRush
Brent needs a catalyst Crude oil prices are trading with a modest bullish bias on Monday, with Brent has settled above the $73 handle, unable to attract a more sustainable buying interest to challenge the 20-DMA marginally below the $74 barrier. The downside pressure on Brent has eased somehow recently. According to POEC sources, Saudi Arabia has cut its crude oil output in July by 200,000 bpd to around 10.29 million bpd. The news came as a surprise as in June, Saudis and Russia pledged to increase output. Meanwhile, according to Baker Hughes, the number of oil rigs in the US declined by two last week to 859. This is the second week of decline in the past three weeks. On the other hand, Saudi Arabia has resumed oil shipments through the Red Sea shipping lane of Bab al-Mandeb, which deprived the market of an important positive driver. At this stage, the overall sentiment in the crude oil markets looks uncertain, and it is still exposed to downside risks, especially on the back of rising dollar. As such, Brent will need an additional catalyst to stage a more sustainable recovery from recent losses and to get back above $74 in the short term.
TVC:UKOIL
by HelenRush
GBPUSD has another test The pound has suffered a lot from the ‘dovish hike’ by the Bank of England on Thursday. The GBPUSD pair slipped from the 1.3130 area, down to the 1.30 level which has been eroded today. The price continues to retreat and could challenge this year lows before the end of the week. The BoE expressed concerns over Brexit process and made it clear that the monetary authorities are not going to hurry with further tightening in the years ahead. The central bank’s cautious tone coupled with the remaining bullish tone around the greenback across the board, prompted a fairly aggressive sell-off in the pound. Despite the fact that sterling looks oversold already in the short-term charts, further decline may yet come in the nearest future. The upcoming US labor market data could serve as another bearish driver for the pair as the buck will get a widespread support should the employment and wages come in better than expected as strong figures will cement market expectations on further Fed rate hike. As such, the key goal for GBPUSD bears now comes at this year low of 1.2957. Should this level withstand the potential pressure, the price could get back above 1.30 before the daily and weekly close.
by HelenRush
BoE’s “dovish hike” will sink the pound The greenback remains on the offensive after the Fed meeting. The US central bank hasn’t said anything new and confirmed its commitment to further tightening. This, coupled with the reemerged trade-war concerns, was enough to support USD demand against major rivals. The GBPUSD is changing hands below the 1.31 figure ahead of BoE’s Super Thursday. Investors are pricing more than a 90% chance of a rate hike today, so the action itself won’t matter much for the pound and the markets in general. Traders will be interested in Carney’s tone as investors want to know about the prospects of further tightening. In this context, there could be bearish surprises for sterling as the central bank will hardly give a hawkish statement, considering the lingering Brexit risks, global trade-war fears and other factors, including fundamental ones as consumer confidence in the UK continues to decline. Therefore, we see some downside risks for GBPUSD in the short term, while a generally strong dollar makes things even worse. As such, should the BoE deliver a so-called “dovish hike”, the pound will further lose ground and could challenge the 1.30 level, where the key 1.2950 area should serve as support.
by HelenRush
Brent may derail the $73 threshold Crude oil prices continue to lose ground on Wednesday following yesterday’s aggressive correction. Brent crude slipped from highs in the $75.60 area, down to nearly two-week lows just above the $73 handle, which so far constrains the selling pressure. After a seven-day rally, the retreat looked inevitable as investors rushed to take profit amid signs of a slowing bullish momentum. The downside pressure intensified after the API report showed that the US crude oil inventories increased dramatically, by 5.6 million barrels last week. Now traders nervously expect the EIA data. Should the official release confirm a substantial rise in stockpiles and point to an increase in production, the bearish move could accelerate in the short term. The additional bearish factor for the market is the escalation of US-China trade tensions as Trump threatens to impose 25% on $200 billion in Chinese goods instead of 10%. On the other hand, Brent will likely refrain from a much deeper correction due to the lingering Iran supply concerns. As such, the price could derail the $73 threshold, but will likely attract demand on further bearish attempts.
TVC:UKOIL
by HelenRush
Dollar focused on Fed The greenback shows mixed dynamics against major rivals this week, being cautious ahead of the Fed two-day meeting starting today. The dollar gained some support in the USDJPY pair as the yen was unfazed by the Bank of Japan meeting as the central bank left its policy unchanged and showed it still lacks flexibility. The pair is holding above the 111.000 threshold which could serve as a base for a move higher, probably, even past the 20- and 14-DMAs. The US currency shifts focus on the upcoming Fed meeting. Despite the central bank is not expected to hike rates this time, market participants will be eagerly waiting for the meeting results as Powell’s rhetoric will set the tone for dollar pairs. The regulator will likely confirm its commitment with further policy tightening, citing solid fundamentals. In this scenario, the USDJPY pair could jump past the 111.75 area, where the 14-DMA lies, with the next target at 112.00. Today’s PCE report, which is Fed’s favored price growth gauge, will hardly significantly affect the sentiment around the buck as trader will likely look past the release ahead of the key events of the week – Fed decision and NFP employment report.
by HelenRush
GBPUSD on the defensive ahead of BoE The British pound finished a third week of decline in a row. On Monday, the GBPUSD pair is attempting to regain ground and clings to the 1.31 handle. However there are still signs that the currency remains vulnerable to further losses, while the recovery potential is limited. The key event for the sterling this week is the BoE meeting due on Thursday. The so-called “Super Thursday” will set further tone to the pair and could bring another sell-off should the regulator refrain from hiking rates citing lower inflation. The odds of a hike exceed 85%, according to market expectations. Another concern for the pound is the rising threat of a “no-deal” Brexit as the key issues remain unresolved while the March 2019 deadline is steadily approaches. Besides, GBPUSD has been trading below the three key moving averages in the daily charts, which points to a bearish technical picture. As such, the short- and medium-term outlook for the pound remains negative, especially against the backdrop of a strong dollar. The immediate support comes at 1.3080. A break below will open the way to 1.2960.
by HelenRush
EURUSD: all eyes on US GDP The euro licks its wounds after a decline on ECB Draghi statements which were cautious and in fact haven’t brought anything new to investors. EURUSD dropped to fresh one-week low of 1.1635 during the Asian hours on Friday and now attempts to regain ground. Meanwhile, market focus shifts from a non-event ECB meeting to the US Q2 GDP report, which could have a significant influence on the dollar and the Treasuries. Economists expect the US economy grew at an annualized pace of 4.2% in the second quarter which is the best growth rate since the third quarter of 2014. Should the figures come in really strong, the dollar will get a bullish impetus, but it won’t last as the two more Fed hikes this year have been priced in already. But disappointing figures could send the greenback substantially lower as the market expectations are very high, due to Trump’s hints as well. Therefore, a lower-than-expected GDP growth rate could send the EURUSD pair north with the key target at 1.17. In this scenario, the upside potential will be strengthened by yesterday’s decline in the single currency as it looks more attractive for bulls now.
by HelenRush
Yen profit taking is coming The USDJPY pair extends gains for a seventh day in a row on Thursday, with the price is testing more that two-week lows in the 110.60 area. Interestingly, the dollar is not inspired by a rise in the 10-year US Treasury yield to a six-week high close to 3%, and it looks like the pair is set for further losses in the short term. The greenback has been trading on the defensive against major rivals this week, but the pressure in the USDJPY pair is especially strong. The yen bulls’ enthusiasm is due to the recent speculations around the possible Bank of Japan policy shift, with traders hope that the central bank will announce a change to the negative interest rate settings. However, the regulator will likely refrain from major adjustments during the upcoming meeting early next week. Therefore, there is a risk of a massive profit-taking in the USDJPY pair, which could open the way to the 111.50 area. Meanwhile, the greenback could continue its decline in the short term, though the 110.00 figure should serve as a support area.
by HelenRush
EURUSD struggles for direction ahead of Trump-Juncker talks The EURUSD pair continues to tread water around the 1.17 handle, unable to attract buying interest ahead of the key event of this week – the EU-US trade talks which could give a more directional impulse to the single currency. The pair failed to make a clear break above the mentioned resistance on several occasions, which points to a lack of bullish enthusiasm among traders. A cautious tone is explained by the upcoming Trump-Juncker meeting where the two leaders will discuss trade relations between the EU and the US. The talks are a wildcard for the euro as trade rhetoric could either send the pair lower amid a risk aversion, or inspire euro bulls should the European Commission President cheer Trump’s call to drop all trade barriers and tariffs with each other so that to encourage free trade. Depending on the outcome, EURUSD could jump to 1.1750 and higher, or drop to the 1.1620-1.16 area. Anyway, the bullish scenario looks less likely, considering that the EU is reported to be preparing counter tariffs of $20B on US goods. Ad for tomorrow’s ECB meeting, it could be a non-event for the pair this time.
by HelenRush
EURUSD: dollar looks to move north The greenback has digested the recent Trump’s verbal interventions and looks to move higher against the majors again, though lacks the impetus so far. The EUEUSD pair has been trading with a mild upside bias on Tuesday, but the recovery attempts look too shallow to allow for a consistent rally from here. The downside pressure on the buck has eased after Trump’s hints at much stronger-than-expected US Q2 GDP of 4.8% due on Friday. The estimate is really much higher than market expectations of around 4% or slightly higher. On the other hand, should the results come in lower than Trump indicated, the dollar bulls will be disappointed. By the way, the euro is yet to have a test by EU-US trade negotiations and the ECB meeting on Wednesday and Thursday, respectively. The market doesn’t expect any “hawkish” surprises from Draghi who could express cautious tone amid the rising trade tensions and risks for the region’s economy.  So traders will likely refrain from buying the single currency ahead of risk events. The short-term outlook for EURUSD points to a decline below the 1.17 and under the 20-DMA, with the next target at 1.1630.
by HelenRush
GBPUSD shifts focus from politics to BoE The pound has recovered on Friday, fuelled by comments by Trump criticizing the dollar’s strength. The USD index retreated from one-year highs as a result and paved the way for a recovery in major currencies. GBPUSD rose from ten-month lows below 1.30 and reached the 1.3150 area, just ahead of the 20-DMA at 1.3180. As the UK parliament starts its summer recess this week, market focus will gradually shift from politics to the upcoming Bank of England meeting due next week. Most traders expect the central bank to hike rates despite the dismal CPI and retail sales data published last week. So, should the regulator refrain from further tightening, the sterling bulls will be heavily disappointed. Meabwhile, investors will continue to follow Brexit developments down the road as markets are now waiting for Brussel’s reaction to London’s plans and proposals. Against the backdrop of the lingering uncertainty around the “divorce” process and a limited nature of the downside pressure on the greenback, the pound will remain on the defensive for now. The immediate
by HelenRush
EURUSD on the defensive ahead of ECB meeting and trade talks The single currency set for a second week of losses, with EURUSD has been trading with a mild bullish bias on Friday, after a brief break below the 1.16 handle yesterday. The dollar demand has abated somehow after Trump’s verbal interventions, but the overall sentiment around the greenback remains fairly robust. The ECB July meeting will take place next week. But the euro will hardly get a boost from this event as the macroeconomic picture barely changed over the last month, and the first rate hike is not expected before the fall of 2019. So, the reaction to the meeting and Draghi’s comments is going to be quite muted. Meanwhile, the general dollar sentiment will continue to set the tone for the pair. The buck remains within a bullish trend – not least due to the lingering trade jitters. So the widespread USD demand will accelerate in case of escalation of the situation. Therefore, the EURUSD pair remains vulnerable to further losses, especially against the backdrop of the upcoming arrival of the EU officials to Washington next week for trade talks.
by HelenRush
GBPUSD: BoE rate hike in doubt The greenback extends gains across the board on Thursday, with the GBPUSD pair failed to hold above the key 1.30 level, sliding down to fresh 10-month lows in the 1.2980 area. Sterling has been declining for a third day in a row, extending losses for a fourth month already. The key reason behind the pair’s bearishness is the dollar demand which resurged strongly after positive Rowell’s comments this week as the Fed Governor confirmed that the central bank will proceed with gradual policy tightening, citing healthy economic fundamentals. Moreover, the buck is also supported by the lingering trade-war worries. The additional pressure on the pound came from the dismal UK economic numbers. The wages, CPI and retail sales data have disappointed this week and raised concerns about the BoE rate hike in August. The situation is compounded by the fact that the threat of a “chaotic” no-deal Brexit. As such, the pair looks poised for further losses in the short term unless the central bank officials reassure markets on rate hike. So far, the pound could drop to 1.29, before buyers reemerge.
by HelenRush
GBPUSD hits a danger zone The pound has been nursing significant losses for a second day in a row. The GBPUSD pair slipped from the 1.33 area to fresh one-year low of 1.30, a danger zone, which if broken, could bring another wave of a massive sell-off. The downside pressure on the sterling came from the resurged USD demand on the back of quite positive comments by the Fed Governor Powell, who dismissed risks from the US trade policy. The sentiment around the pound has also worsened after the BoE head Carney highlighted the risks from a no-deal Brexit scenario. Meanwhile, the latest macroeconomic data failed to inspire the sterling bulls as the CPI numbers came in lower than expected. So, it’s evident that inflation pressures in the UK are abating despite the weaker currency and high oil prices. This could pose a threat for the BoE rate hike in August, should other data confirm that the economy shows signs of weakness. However, for the time being, the expectations remain high, though the probability of a hike next month has fallen to 70% from 77% before the release. Tomorrow, the pound will have another test by retail sales data. Should the numbers disappoint, the pair could extend losses. Meanwhile, in the short term, a mild upside correction could take place.
by HelenRush
GBPUSD: the hard way north The GBPUSD pair continues its marginal ascent on the back of dollar retreat across the board. Safe haven demand has abated as trade-war worries have stepped back for now, which derails the greenback’s attractiveness. Besides, the buck is cautious ahead of the upcoming Fed’s Powell testament. The pound has also received an additional boost from the UK wages data which came in at 2.5% in June, as expected, while the unemployment rate remained unchanged at the four-decade low of 4.2%. Despite the figures are not spectacular, the report confirms that the economy is quite ready for the BoE rate hike in August, which supports sterling demand. However, as other important UK releases are due in coming days – CPI and retail sales – the pair’s near-term upside potential is limited. The price struggles to get back above the 1.33 threshold for the last seven days, and the downside risks remain as long as the pound remains below this local resistance level. The price needs to keep gains above the 20-DMA at 1.3220 in order not to lose the upside potential.
by HelenRush
EURUSD still depends on dollar sentiment EURUSD declined last week after three weeks of gains. The pair looks neutral on Monday, changing hands around the 1.17 threshold, which serves as the key barrier for short-term buyers. USD index looks quite stable, but has started the week mainly on the back foot, which raises a chance for a more sustainable rebound in the single currency. The general sentiment around the greenback remains the key river for the pair. As trade-war fears have abated somewhat, the overall sentiment in the global financial markets remains cautious, which supports safe-haven USD demand. In the short term, US June retail sales data will be in market focus. Should the numbers disappoint, the euro could regain the 1.17 mark and target the 1.1760 area which comes as the intermediate resistance on the way to 1.18. As long as the price remains below this barrier, downside risks will prevail. As the broader picture shows, EURUSD remains within a bearish trend, and there is a risk of a decline towards the lows around 1.15 as the buck could regain the impetus due to trade-war jitters and further “hawkish” signals from the Fed down the road.
TVC:UKOIL
by HelenRush
EURUSD: room for further losses The single currency remains under pressure these days, with the EURUSD is on track to finish the week in the negative territory after three weeks of gains. The price slipped to multiday lows of 1.1625 and now threatens the 1.16 threshold as the sentiment around the buck remains upbeat. The pair managed to bounce from lows yesterday, but failed to get back above the 1.17 key figure despite the US CPI data came out mixed. The greenback received a local boost from positive comments by the Fed chair Powell who said the country’s economy is in good place at the moment. The overall USD bullishness still comes from safe haven demand amid trade war jitters, as well as from Fed’s tightening path in contrast with the uncertain outlook for the ECB policy. The technicals point to the lingering downside risks in the short term, with the immediate outlook has worsened following a break below the 1.1650 support one. However, should the greenback fail to receive the additional bullish boost in the nearest future, the pair may well stay above the 1.16 area.
TVC:UKOIL
by HelenRush
Brent licks wounds after rout Crude oil price suffered a steep decline yesterday, extending losses to the $73 level, -7.5% on the day. On Thursday, Brent makes recovery attempts, with the initial resistance now comes at $75. Despite the sell-off has stopped, prices still look vulnerable as the recovery momentum is too weak so far. Libya has resumed production earlier than expected, while Saudi Arabia reported a decent jump in output for June, which, coupled with trade war jitters, triggered a free fall in the market and outweighed supply shortage concerns. By the way, the retracement was overdone and too emotional as in the wider picture, the market remains tight and broadly balanced. Moreover, US shale production continues to stagnate, while inventories decline further. In the short term, Brent needs to regain the $75 figure with the next target at $77. The obstacle for bulls is market worries over the trade war consequences for global oil demand. The rising dollar restrains the buying pressure as well. On the other hand, against the positive fundamental background, Brent looks attractive for opening new longs at current levels.
TVC:UKOIL
by HelenRush
EURUSD: 1.17 in focus EURUSD ended flat on Tuesday, with the pair has been trading under a mild bearish pressure today as the greenback attempts to regain ground. The US dollar receives some support amid the risk-off environment that resumed after the Washington announced 10% tariffs on USD200B Chinese imports. The price faced a stiff resistance level of 1.18 earlier this week, and since then, the euro struggles to resume the upside impetus, despite the bullish bias in the buck is rather muted. The recent pressure on the euro came from dismal German data as ZEW Economic Sentiment dropped to its lowest reading since August 2012, fueling concerns over the state of the largest euro area economy. The single currency is looking forward to receive a fresh impetus which could come from Draghi’s speech later today. Any comments on the ECB’s monetary policy outlook could stir volatility in euro pairs. Should Draghi be cautious or mention concerns over trade tensions and the regional economy, the EURUSD pair will challenge the 1.17 level once again, where the 20-DMA around 1.1650 will serve as rather a stiff support. Should the ECB governor not mention the monetary policy theme, the pair will continue to be guided by the overall USD sentiment.
by HelenRush
Gold: technicals improve, but risks remain Gold prices hit a two-week high yesterday, but trimmed intraday gains afterwards. The yellow metal touched levels marginally below the $1,266 figure and closed below $1,260. On Tuesday, gold has been trading just above $1,255, with a mild bearish bias. The precious metal gained last week due to dollar weakness which continues these days. The cautious investor tone amid Brexit uncertainty and trade war jitters give only a marginal support to the metal as its safe haven status has been eroding lately. Despite the overall technical picture has improved recently, gold remains vulnerable to fresh losses in the short term. The dollar dynamics remains the key driver for the bullion. As the pressure on the greenback has been easing today, the short-term outlook for gold looks cloudy at this stage. The price needs to get back firmly above the $1,260 area to regain the upside impetus, while the key on the upside is the $1,266 level. On a weekly basis, US CPI data due on Thursday could fuel gold demand should the numbers disappoint the USD bulls.
TVC:GOLD
by HelenRush
EURUSD: focus on Draghi and US CPI The EURUSD pair surged to almost one-month highs around 1.1780 on Monday, extending gains after three weeks of recovery from 2018 lows marginally above the 1.15 figure reached in June. The main driver behind the price rise is the abating dollar impetus within the bullish trend. The latest pressure on the greenback came from dismal US wages data on Friday. Despite better-than-expected employment data, the buck remained on the defensive following the release as weak wages growth signals moderate inflation which in turn confirms that the Fed tightening path should be gradual. In the short term, the euro could turn more volatile as traders wait for ECB Draghi’s speech due later today. Hawkish twists in the central bank governor’s speech may send the single currency even higher, probably to the 1.18 area. However, chances for a decisive break above this level are still low as traders will be cautious ahead of this week’s US CPI report. Technically, EURUSD needs to confirm a break above the 1.1750 region in order not to stage a retreat from current levels. The immediate upside target comes at 1.18. A break above this level will open the way to 1.1850. The risk for this scenario is the recovery in USD demand.
by HelenRush