BY Lukman Otunuga
Global Markets
Euro bears were provided with inspiration following Mario Draghi’s dovish rhetoric on the Eurozone economy during his conference in Brussels, which sent the EURUSD back below 1.07 at 1.0690. His repeated dialogue about the ECB implementing additional stimulus measures to the Eurozone economy if needed was once again approved by the Euro bears. Investors digested Draghi’s comments about the central bank being willing to act if medium-term price stability was at risk as an indication that the ECB are going to provide further monetary easing. With expectations mounting that the European Central Bank is close to taking action in the near future, the EURUSD has printed new daily lows slightly below 1.07. Moving forward the Euro looks set to remain depressed as investors pile on bets that the ECB could implement further QE before the end of the year.
The reoccurring concerns over the current supply glut of Oil in the markets have invited an opportunity for WTI sellers to drag prices towards a near two-month low at $42.61. US stockpiles expanded by 6.3 million barrels last week which has once again weighed on oversupply anxiety, while other investors are also still digesting the global economic downgrade from the Organization for Economic Co-operation and Development (OECD) at the beginning of the week. This dangerous combination of both an aggressive oversupply and a potential decline in global demand for oil has persistently disrupted any investor attraction towards WTI, and repeatedly limited any hopes of the commodity bouncing back. With WTI oil remaining both fundamentally and technically bearish, the breach below $43 may well just be the first checkpoint to lead to a deeper decline in the future.
Later on today the focus will likely be directed towards the scheduled speeches of several Federal Reserve members, including Chair Janet Yellen. Market participants may use these speeches to attain additional clarity on when and how the Fed plans to raise US interest rates. Dollar sensitivity to interest rate expectations remains rife and if the hawks are awoken today, the Dollar may experience an appreciation across the global currency markets.
Commodity spotlight – WTI
WTI is technically bearish on the daily timeframe and the inverted wedge pattern which was discussed in the previous report has been breached to the downside. Prices have found resistance below the daily 20 and 50 SMA and the MACD has crossed to the downside. A daily close below the $43.00 support may open a path for a further decline towards the $41.00 level.
Dollar Index
The Dollar Index is technically bullish on the daily timeframe. The growing expectations that the Fed may hike US rates in 2016 have instilled USD bulls with ample momentum. A potential bull flag may be forming on this pair which should open a path to the 100.00 resistance.
GBPNZD
The GBPNZD is technical bullish on the daily timeframe. Prices have found some support above the daily 20 SMA and the MACD is in the process of crossing to the upside. A breakout above the 2.330 resistance may open a path to the next relevant level at 2.400.
EURJPY
The EURJPY is technically bearish on the daily timeframe and prices may continue to decline to the 130.50 support.
EURAUD
This pair is technically on the daily timeframe. There have been consistent lower lows and lower highs. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. The EURAUD may decline to the 1.4750 support.
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