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AUDUSD: longer term prospects look more bearish AUDUSD feels relatively comfortable in the familiar range, with the immediate resistance comes at last week’s highs around the 0.72 figure, while on the downside, the selling pressure is capped by the 0.7060 handle. The short term technical outlook looks neutral, while in the longer term, the pair could face some difficulties. The aussie feels a drag from the decision by some Chinese ports to ban imports of Australian coal. Additionally, despite the general optimism, there is now some skepticism over the prospects of striking a trade deal between the US and China, even as Trump extended the deadline on Sunday. Souring risk sentiment could boost the US dollar demand, which in turn may put the Australian currency under pressure. Besides, there are some downside risks for AUD from RBA. The upcoming policy meeting due on March 5 will hardly bring any changes in rates, but in the month to come, the central bank may adopt a more dovish tone and cut rates in the second half of the year. Therefore, longer term prospects for AUDUSD look more bearish in this context.
by HelenRush
Euro may lose ground this week The common currency appreciated last week and has settled above the 1.13 threshold after a short-lived jump to a high of 1.1370 earlier in the week. The recent rally seems to have stalled, while the current recovery attempts look too modest at this stage. Despite the risk-on sentiment across the board, EURUSD fails to show a sustainable rally. Such dynamics shows that the worries over the euro zone economy continue to weight prices and drive the euro appeal lower. At the same time, the Federal Reserve seems to be ready to resume hiking rates this year even though the central bank decided to make a dovish shift citing global and local risks. A stiff resistance at 1.1370 and the overall downtrend that remains intact suggest the pair is headed lower in the days to come. So the risk of breaking below 1.13 remains, with the first target lies at 1.1275. Despite the bearish risks seem to be abating on the short term, the upside potential remains limited at this stage, and the technical picture could improve provided that the greenback will lose ground across the board.
by HelenRush
USDJPY: bullish breakthrough is possible USDJPY remains in a limited range this week, with the 111.00 figure continues to act as the key resistance. The pair dipped marginally yesterday amid investor optimism over the US-China trade talks and another portion of weak economic data from the US. On Friday, the dollar is trying to resume growth but lacks the impetus against the backdrop of mixed investor sentiment across the globe. The overall hope that the US and China will finally conclude a trade deal keeps riskier assets afloat and caps the safe-haven yen demand. On the other hand, lack of details on progress in negotiations deprives investors of enthusiasm. On the data front, Japan’s January headline CPI rose 0.2% against 0.3% in the previous month. The national CPI ex-food came in at 0.8%, in line with market consensus versus 0.7% earlier. Despite the consumer price growth accelerated, the index is still far from Bank of Japan’s 2% target, which highlights the fragility of the recovery process. Technically, the USDJPY pair struggles to get back above the 111.00 resistance. A break of which could open the way to the 200- and 100-DMAs at 111.30 and 111.50 respectively. A bullish breakthrough in the near term is possible if some obviously positive details and comments come from Washington, where the trade negotiations continue.
by HelenRush
Oil rally takes a pause Crude oil prices resumed the rally on Wednesday and extended gains to the $67,43 figure. After reaching fresh November highs, Brent has settled around the $67 level and looks directionless in the short-term charts, trading with a slight bearish bias on Thursday. The recent ascent in prices was fueled by a number of factors. Saudi Energy Minister Khalid Al-Falih said he hoped the oil market would be balanced by April and that there would be no gap in supplies amid US sanctions on Iran and Venezuela. By the way, according to reports, OPEC exports set to hit a four-year low this month, mainly due to supply cuts in Saudi Arabia, Iran and Venezuela. Meanwhile, API report showed that US stockpiles increased by a relatively modest 1.26 million barrels last week, while gasoline stockpiles declined by 1.5 million. Despite the rally has stalled for now, Brent looks set for further gains in the short term amid signs of progress towards the trade deal between the US and China. So, in the coming days, prices could well reach the next barrier at $68.
OANDA:BCOUSD
by HelenRush
Gold may extend gains Gold prices received a boost from dovish comments by Fed’s Mester that sent the dollar lower nearly across the board. Traders were at a loss as this central bank official used to be hawkish, which added to the upside pressure on the precious metal. The prices surged to fresh April highs above $1,346 on Wednesday and remain elevated despite some correction from the top of the extended bullish range. Despite some overbought conditions, the yellow metal could extend the rally in the near term on the potentially dovish FOMC meeting minutes due later today. The Federal Reserve retreated from a hawkish rhetoric last month that dominated in 2018. A likely confirmation of a more cautious and wait-and-see stance will cap the greenback further and thus could help the gold prices to at least remain in the positive territory. In the longer term, the metal will continue to assess the developments between Beijing and Washington, and fresh signs of progress may keep a lid on bulls, but the lingering doubts in making a deal soon will allow the bullion to refrain from changing the upside trajectory. In case of profit-taking, the prices will first target the $1,334 figure.
TVC:GOLD
by HelenRush
EURUSD upside bias looks vulnerable EURUSD is consolidating previous gains on Tuesday, with the pair has settled around the 1.13 psychological level. Despite some softness, the dollar is holding rather firm as traders are focused on US-China trade talks in Washington due to resume on Thursday. So, in the coming days, the greenback will likely remain rather robust, if, of course, the FOMC meeting minutes don’t disappoint by a dovish tone. Despite the upside bias, EURUSD recovery still looks rather modest and vulnerable as the economic data from the euro zone continue to fuel concerns over slowing growth, especially in Germany. The economy was flat in the fourth quarter after contraction in the previous quarter, first since 2015. Technically, the pair needs to hold above 1.13 in the near term in order to target the 1.1325 intermediate resistance on the way to 1.1340 and then 1.1360. A break below 1.13 will open the road to 1.1270 and 1.1250. Should the upside bias stall, the euro could turn lower for the day. Further dynamics will depend on the tone of the FOMC minutes.
by HelenRush
FOMC minutes in focus this week As the latest Fed meeting was accompanied by the central bank’s commitment to data dependence, flexibility and patience, the upcoming FOMC meeting minutes may have a significant impact on the markets and the dollar in particular as the monetary authorities are expected to clarify the prospects of their monetary policy. Should the regulator hint that the shift in the tone was not an abrupt turnaround from its earlier hawkish statements, and highlight that the path of future decisions will depend on the incoming data, it could be somehow positive for the greenback. It will also be interesting to see how the Federal Reserve estimates the economic risks. In this context, a mention of an imminent danger of a recession is unlikely. But a more downbeat rhetoric is possible. If the Fed says that it continues to see sustained growth as the most likely path for the economy, the buck could get a lift. Towards the end of last week, the dollar upside momentum started to abate. And there is a high probability that traders will tend to fix profit further ahead of the release due to a high uncertainty. In a wider picture, the US currency remains relatively robust against the backdrop of weak European data.
AMEX:USD
by HelenRush
Brent shows resilience Soft US retail sales data reignited concerns among investors and weakened risk appetite in the global financial markets. However, crude oil prices showed resilience and extended the rally towards fresh nearly three-month highs around the $65 psychological mark on Friday. Brent seems to have encountered a local resistance at this level as lack of news from trade negotiations and further signs of weakness in the Chinese economy cap the optimism in the market. The January inflation data has disappointed as consumer price growth has slowed to 1.7% from 1.9% in the previous month. In fact, short-term direction in the oil market hinges on the signals from Beijing. At the moment, lack of statements and comments makes investors nervous and worry about the potential escalation in the trade war. Positive news could lift Brent further but the rally is unlikely to be sustainable as some traders may opt to take profit at attractive levels. Technically, the prices need to confirm a break above the $65 figure to register another upside breakthrough. Brent will likely register a daily and weekly closing below this level.
OANDA:BCOUSD
by HelenRush
What’s driving the dollar higher? The Fed took a pause in hiking rates but the greenback rallies. After eight sessions of strength, the ascent stalled, however demand reemerged quickly and took the currency to fresh highs. So what’s behind the USD strength after all? Essentially, it’s more weakness in other currencies rather than dollar appeal. It is just ‘best of a bad bunch’ as, for example, euro suffers from increasing risks to the European economy. The reports point to a slowdown in Germany, the region’s growth engine. And the overall health of the euro area economy is worsening. A worri-some political background in Italy, France and Spain add to the gloomy sentiment in the region. Meanwhile, the threat of another US government shutdown is abating as Trump shows readiness to sign the border security deal despite he is "not happy" with the deal reached by congressional negotiators this week. The trade spat with China is also on the way to being resolved. And the US fundamentals look better than in other economies. At the same time, the greenback will hardly be able to significantly extend the current rally without a less dovish rhetoric by the Federal Reserve. As such, the upside potential from here looks limited, though the currency will likely retain its bullish tone in the short term.
AMEX:USD
by HelenRush
Gold stuck in a range Gold extends a gradual ascent on Wednesday but the dynamics still looks unsustainable. This is not surprising, considering a widespread investor optimism over trade talks in Beijing and arrangements in Congress to avoid another shutdown. The bullion stays above the $1,300 psychological support but fails to make a sustained break above $1,315. The dollar saw the biggest one-day losses in nearly two weeks yesterday, which partially supported the precious metal. Besides, the downside pressure on the bullion is limited as some investors remain cautious despite the growing optimism on US-China trade relations. The lingering concerns over the global growth that took a back seat for now, could reemerge at any moment and lift demand for safe-haven gold. This also helps the metal to stay afloat. In the short term, the prices will likely remain in a familiar range, though short-lived spikes could take place as well. The risk of losing the $1,300 handle is limited but the chance that gold will make a decisive break above $1,315 is not strong either.
TVC:GOLD
by HelenRush
RBNZ will turn more dovish The Reserve Bank of New Zealand rate decision on Wednesday will attract market attention, as NZDUSD has been trading at three-week lows marginally above the 0.67 figure. It is widely expected that the central bank will take a more dovish tone, citing risks at home and abroad. RBNZ survey for the first quarter of 2019 showed that 1-year inflation expectations declined below 2%. Last week’s labor market report was extremely bearish, with unemployment spiked sharply, rising to 4.3% against 4.1% expected. Employment rose by just 0.1% in Q4, while the labor cost index in-creased by only 0.5%, also short of expectations. Considering the slowing growth and inflation at home, as well as external risks, including US-China trade tensions and worrying signals from the global economy, the monetary authorities will likely take a more downbeat rhetoric during the first meeting in 2019 and will keep rates on hold at record low. For NZDUSD, such a scenario implies further downside pressure. However, a dovish tone won’t be a surprise for traders as it is likely prices in already. So the bearish risks for the kiwi are limited from this event. In the short term, the pair could manage to hold above the 0.67 support as dollar demand seems to be easing after a spectacular rally since early February, though downside risks persist.
by HelenRush
Dollar still has advantages over its rivals The greenback had a fruitful week, with the US currency has decently appreciated against most rivals. Safe haven demand was the key driver as investors continue to assess global growth prospects and further price in lower activity in major countries. The trade-related fears reemerged as well, which gave the additional lift to the dollar. Despite the recent Fed’s dovish shift, the monetary policy divergence is still there as other major cen-tral banks won’t proceed to policy normalization against the backdrop of dismal economic reports. Therefore, the greenback remains attractive in this context due to higher rates in the US even as the Federal Reserve decided to take a pause in its tightening cycle. Considering that the US economy feels better than others, and the rising concerns over the US-China trade relations, the dollar could remain elevated in the medium term. As for the immediate outlook, the risk for the US currency is the political landscape in Washington. Another government shutdown looks increasingly likely. The border security talks stalled on Saturday, and should the lawmakers fail to find a middle ground before a February 15 deadline, the government will shut down again.
NSE:DOLLAR
by HelenRush
Brent threatens $60 again Crude oil prices resumed the downside move after a brief pause and could threaten the psychological support of $60 should the selling pressure persist. Brent is attempting to cling to the $61 handle but considering the general risk-off tone in the global financial markets, bearish risks could overweight in the short term. Risk appetite soured as a senior US administration official said Trump and China's Xi Jinping are ‘highly unlikely’ to meet before March 1 deadline. Meanwhile, White House economic advisor Larry Kudlow said there's a "pretty sizable distance to go" before the U.S. and China reach a sweeping trade agreement. Not surprisingly, hopes of striking a trade deal before March 1 started to abate quickly, with risk aversion hit the markets across the globe, including commodities. Another source of concerns for oil traders is the slowing global growth. The European Commission cut its outlook for euro zone GDP growth yesterday. Moreover, the Commission also revised the average oil price outlook lower by 20% from estimates made in autumn. Against this backdrop, Brent may lose the $60 level for the first time this month, once the price fails to stay above $61 in the short term. On the other hand, the downside pressure should be limited due to sanctions against Venezuela and Iran. By the way, the US Special Representative for Iran Brian Hook said this week that Iran’s oil customers should not expect new U.S. waivers in May. In the medium term, this factor may support the market.
OANDA:BCOUSD
by HelenRush
Gold faces a stark choice Gold extends losses from last week’s highs and holds at fresh one-week lows registered on Thursday around $1302. As such, the precious metal has settled within striking distance from a psychologically important support at $1300. The bullion now faces a stark choice: to hold above this level or to speed up its bearish correction on a break lower. The selling pressure comes from a stronger dollar. The USD index is hovering around a two-week high today, rising nearly across the board after a deep sell-off amid Fed’s dovish shift last week. Besides, the yellow metal is pressures by lower liquidity in the markets as Chinese markets are closed for the Lunar New Year holiday this week. On the other hand, the downside momentum us capped by the lingering worries over slowing global economic growth, the risk of another US government shutdown, Brexit uncertainty and investor cautious tone ahead of another round of US-China trade talks due next week. The trade negotiations will come into market focus in the days to come, and lack of substantial progress towards a deal could sparkle risk aversion across the global markets. Such scenario will play into gold’s hands. In the short term, however, the downside risks persist. A break below $1300 could fuel a more aggressive profit taking.
TVC:GOLD
by HelenRush
Euro hinges on dollar sentiment  The common currency extends its pullback after the earlier rally above 1.15. EURUSD has been losing ground for a third day in a row. On Tuesday, the prices managed to hold above the important psychological level of 1.14 but today, the sellers pierced this handle, which points to a risk of an even deeper correction.  The euro zone reports continue to disappoint and fuel concerns over German growth. In another sign of slowing economy, German December factory orders declined by 1.6% versus +0.3% expected. Despite the volatile nature of the release, the figure adds to fears over the health of the largest euro area economy.  As such, there are no factors or drivers at the moment that could lift EUR sentiment as the fundamental picture in the region remains gloomy. Therefore, the pair’s dynamics will hinge on the general dollar behavior as well as on risk sentiment in the global financial markets.  Technically, the downside risks have increased after a break below 1.14, to January 25 low of 1.1380. On the other hand, the dollar that has already regained its post-FOMC losses, could lose the upside momentum in the short term. In this case, EURUSD may settle around the 1.14 figure which remains in traders’ focus for now.
by HelenRush
GBPUSD shifts focus from Brexit to ‘Super Thursday’ GBPUSD extends its pullback from highs above 1.32 registered last week. The pair has settled around the 200-DMA at 1.3040 which caps the downside pressure so far and prevents a dip below the psychological level of 1.30. The dollar shifted to a recovery mode on Monday and preserves the bullish bias today, which adds to the local pressure on the pound. The sterling is trending lower lately as fears of a no-deal Brexit reemerge because the talks have stalled, the March 29 deadline is getting closer, and the two sides still haven’t reached a consensus on the key Irish border issue. Against this backdrop, traders prefer to exit longs in the cable though profit-taking proceeds in a measured and cautious manner. On Thursday, investors will temporarily shift focus from Brexit and switch to the Bank of England’s ‘Super Thursday’. The central bank will announce its decision on rates, publish its meeting minutes and the quarterly inflation report. Given the lingering uncertainty surrounding Brexit, traders will pay a special attention to the officials’ comments regarding the effect from the divorce process for the economy and monetary policy. Should Carney mention economic risks, GBPUSD could go even lower.
by HelenRush
Aussie loses ground ahead of RBA meeting AUDUSD declined on Friday after a strong US jibs report lifted the greenback marginally across the board. The pair remains under some pressure at the start of a new trading week as the USD receives another mild boost from the latest labor market data. The US non-farm payroll grew 304k in January, well above expectation of 165k. But the previous figure was revised sharply down from 312k to 222k. Moreover, average hourly earnings rose just 0.1% versus expectation of 0.3%. In fact, the dismal wages growth confirms the weaker inflation pressures in the US and justifies the recent dovish shift in the Federal Reserve’s tone. Accordingly, the buck failed to capitalize significantly on the data. However, the aussie remains under the increasing pressure on Monday. Ahead of tomorrow’s RBA meeting, the latest report showed that Australian building permits fell 22.5% in December from a year earlier after plunging 33.5 percent in November. As a result, that was the worst two-month result since January-February 2009. As for the RBA meeting, it looks increasingly likely that the central bank’s statement will be less upbeat than in December. Considering that other monetary authorities tend to soften their stance due to softer global growth outlook, the RBA may find it appropriate to act the same way and downgrades its GDP forecasts. In this scenario, AUDUSD could weaken further but as the statement is expected to be more neutral than dovish, the bearish potential will likely be limited. As such, the pair could get back below 0,72 but stay above the 0.7070 region.
by HelenRush
Euro underestimates the economic risks in Europe After a rally amid a widespread dollar sell-off following a more cautious Fed’s stance at the meeting, the euro capitulated much of the previous gains and turned negative on Thursday. The common currency resumed the ascent today but the impetus looks too modest to bring the pair back above 1.15. The key reason behind the latest bearish correction in the EURUSD pair was the statement from the Bundesbank President Jens Weidmann. According to him, economic weakness is likely to extend into the current year. Considering that Weidmann is an outspoken hawk, such a gloomy outlook for the largest European economy scared investors. Moreover, he is also seen as a candidate to replace ECB President Mario Draghi later this year. Despite the euro shrugged off the signals from the ECB official after a negative knee-jerk reaction, traders shouldn’t underestimate the economic risks in the region as the central bank won’t start the hiking cycle until it is firmly confident in the absence of a downside momentum in the economy. In the context of monetary policy divergence, this means that the central banks’ policy still plays into the dollar’s hands despite the Federal Reserve takes a pause in tightening.
by HelenRush
Italian recession as a wakeup call for euro The euro is rising for a fifth week in a row, encouraged by weaker dollar and better risk sentiment. The greenback continues to digest the Fed’s dovish message on rates. Powell, who is particularly careful about the message he sends markets, confirmed that the central bank had softened its stance and will take a pause in hiking. Despite a softer tone was expected by the markets, the dollar sagged and risky assets rallied. Against this backdrop, EURUSD challenged the 1.15 barrier for the first time in three weeks and refreshes the highs on Thursday. However, fresh economic data made the common currency give up part of gains as euro zone GDP in the fourth quarter stayed at its lowest rate in four years. But the main concern is that Italy’s economy slipped into a technical recession as the GDP contracted by 0.2% q/q in Q4 after a 0.1% fall in Q3. The government officials tried to calm down the worries as Di Maio said the GDP contraction shows failure of previous governments, while the prime minister Conte highlighted that the recession is temporary and due to US-China trade war. Anyway, the longer term, today’s data should serve as a wakeup call for euro bulls who are focused on the Fed’s dovish shift, as considering the budget issues, it’s hard to imagine how Italy is going to post a decent recovery this year.
by HelenRush
The Fed will stress its data-dependence Global investors are awaiting the outcome of the FOMC’s January policy meeting. Stocks and currencies are muted ahead of the important verdict. While nobody expects any changes in the rates, the estimates of the potential rhetoric by the Federal Reserve differ. Against the backdrop of the latest speculations, one of the key issues for markets is the possible end of the balance sheet reduction plan earlier than previously expected. But Powell will likely refrain from details and decisive statements on the issue, though a hint at such a step could put the greenback under pressure. The central bank could also revise slightly lower its economic assessment and even adjust the forward guidance, suggesting that the economic activity is ‘solid’ instead of ‘strong’. Also, chances are high that the monetary authorities will emphasize the data-dependence in the context of further rate hikes in the future. If so, the uncertainty will rise but at the same time, it could revive hopes for resuming the tightening cycle some time later this year. As such, the downside risks for the dollar from the upcoming meeting are limited, and the potential sell-off could be short-lived. And let’s not forget about the US-China trade talks that will set the tone for markets in the days to come.    
AMEX:USD
by HelenRush
Why is oil market indifferent to turmoil in Venezuela As was widely expected, the United States sanctioned Venezuela's state-owned oil company, in an effort to put more pressure on Maduro and oust him from power. The restrictions block about $7 billion in PdVSA assets. The American companies have until March 29 to wind down operations with PDVSA. However, crude oil markets have barely reacted to the measure. On Tuesday morning, Brent made some shallow recovery attempts but attracted the selling interest again and failed to regain the important $60 level. Why is the market so indifferent to geopolitics this time? In fact, there is a number of reasons behind the lack of positive reaction. First, traders are focused on the US-China trade talks amid the growing worries about the global economy and the outlook for oil demand. Second, Venezuela’s exports declined to little more than 1 million barrels per day in 2018 already and further cuts could be easily replaced by Middle Eastern countries so the general impact on the supply side could be minimal. Third, there are exemptions for a number of US companies, including Chevron, Baker Hughes and others, that will continue operations in Venezuela until July 27. Fourth, it may be difficult, but PDVSA may yet be able to find new buyers in the future. The effect from the sanctions could be felt by the global markets some time later but for now, traders don’t see any
OANDA:BCOUSD
by HelenRush
Dollar: FOMC and NFP in focus The greenback that suffered steep losses on Friday and remains mainly on the defensive at the start of a new trading week, will have a critical test in the days to some. The FOMC meeting and the NFP employment report will set the tone for the major currency pairs in the short term. Investor concerns over the US GDP and the global economy in general make the markets vulnerable to losses and assume a more cautious tone by major central banks amid the increasing signs that the economy still needs support from the monetary policy and is not ready for tightening yet. Moreover, there are even speculations about a possible recession.  In this environment, market expectations of further rate hikes in the US are rapidly abating, while the political chaos in the US adds to the worries. As such, traders are betting on a more cautious Fed’s tone and expect the officials will signal a pause in tightening on Wednesday. The dollar is ready for a more ‘dovish’ scenario but downside risks for the currency are still there.  As for the labor market report, following a string growth by over 300K in December, the results could disappoint, also due to the US government shutdown. A result around +100K will be a bearish scenario for the buck, while a rise by approximately 150K is going to be a neutral outcome for the American currency. In general, the bearish risks for the USD prevail, especially amid a threat of another government shutdown.
AMEX:USD
by HelenRush
EURGBP may drop further What is going on with the European currencies now cab be clearly seen in the GBPUSD dynamics. The cross has lost more than 3% over the last ten trading days and touched a May 2017 low marginally above 0.86 on Friday. It looks like the pair has found a local bottom at this level as the euro turned positive on the day during the European session. However, the fundamentals continue to signal the downside risks for the cross are still there. The common currency sell-off intensified after Draghi highlighted the increasing downside risks for the regional economy. Moreover, ECB’s Vasiliauskas said today that the central bank forecasts will be revised in March while the balance of risks has a ‘negative outlook’. Meanwhile, the ECB released the results of its latest survey of professional forecasters that sees slower growth and inflation projections. In particular, 2019 GDP growth is now seen at 1.5% versus the previous estimate of 1.8%. All the comments and numbers confirm that a rate hike this year is getting more unlikely, which will continue to press the euro lower. Considering the rising chances of a ‘soft’ Brexit, the near-to-medium outlook for EURGBP remains bearish. So despite the oversold conditions the cross will likely resume the downtrend after a pause. An important technical break below the immediate support at 0.86 could attract more sellers and open the way towards 0.85.
by HelenRush