The oil market is always highly volatile.
Morning brief for March 29
US dollar rose rejuvenated from its ashes to live another bullish cycle. The US Dollar Spot Index jumped to 99.60. The euro, sterling, swiss franc and the yen were all lower.
The British pound experienced a sharp downfall from 1.2450 to 1.2400 after UK PM Theresa May signed the Article 50 letter before handing it to Donald Tusk, European Council President. The handwritten letter will be delivered by UK ambassador to the EU at 14:30 MT time. The event was well reported to market participants. It will unlike have significant consequences for the pound. The recent sterling’s slide was driven on the profit-taking as traders are striving to cover themselves from possible spikes in volatility. Cautious traders might consider trading the market after it settles down after the release of the news and only then you may buy GBP/USD for a brief recovery.
EUR/USD hit 1.9050 before dropping sharply to 1.0805. At the present moment, the pair is probably heading to consolidation phase even though the bears have recently flexed their muscles. The immediate support can be found at 1.0800, 1.0760. The economic calendar for the pair is light with some comments from Fed’s members to be delivered later.
The yen showed little activity in the Tokyo session. USD/JPY slipped to 111.10. On the downside, there is a sturdy support at 110.00. A break of the upper levels (111.50, 112.85) will indicate that the downward pressure has eased. For the present moment, the technical outlook for the pair is neutral. Today’s focus will on the Chicago Fed President Evans speech that should be delivered at 13:20 MT time.
Aussie edged up to 0.7660 in the Asian session probably due to surging commodity prices (iron ore in particular), as there were hardly any significant events that could start the rally. On its way to the upside, the Australian dollar may encounter several resistances at 0.7740/50. In case of a pullback, the prices may face several supports at 0.7585/1.590.
On the USD/CAD technical chart, the bullish phase is intact. The US dollar may extend its gains further towards the resistances at 1.3420, 13535 (March 9 high). A possible reversal can occur in 1.3500/1,3550 region. But the latter scenario for the present moment will unlikely realize any time soon as oil prices don’t warrant their support to loonie in the near term as the destiny of OPEC/non-OPEC production cut deal still needs to be decided. Brent oil futures revived from its recent downfall haven risen to $51.60 on the expectation that an OPEC-led output reduction will be extended for additional 5 months and on the supply disruptions in Libya. WTI futures spiked to $48.60 in the past sessions. Today’s focus will on the US crude oil inventories data. The consensus forecast favors a further surge in oil prices.
Narrowing bearish Ichimoku Cloud with rising Senkou Span A; a dead cross of Tenkan-sen and Kijun-sen, but rising Tenkan-sen; the bulls could breakout the Kijun’s resistance.
GBP/JPY broke support level 141…
Recommendation: BUY 0,9765 SL 0,971 TP1 0,985 TP2 0,9895…