Forex News Analysis by LiteForex

Brent Crude Oil: the trend reversed downwards

Current trend

On Tuesday, Brent crude oil price hit its lowest level since early February, falling by 15% from recent highs in early March.

Yesterday, trading in futures closed at 60.79, the spread for the coming months for Brent and WTI Crude Oil turned into contango, where contracts are cheaper than in later months, which indicates a decrease in demand for crude oil. Market sentiment remains “bearish” as analysts fear a slowdown in demand recovery after new pandemic restrictions in Europe. For example, Germany, the largest oil consumer in the region, extended its isolation until April 18. In the US, the number of new infections may also grow during the spring break.

Over the past week, according to the American Petroleum Institute, US stocks of crude oil increased by 2.9M barrels, contrary to analysts' expectations of a decline of 900K. Official data from the Energy Information Agency will be released today. According to the forecast, a slight decrease in reserves by 272K barrels is expected.

Support and resistance

Yesterday, the key support of the long-term uptrend at the level of 63.03–62.61 was broken. The next downward target is the level of 59.33.

Within the medium-term downtrend, target zone 3 (60.96–60.60) was reached. The breakdown of 60.40 allows decline will continue to target zone 4 (57.36–57.00). The trend border shifts to 65.48–65.01.

Resistance levels: 63.03, 65.00, 67.55.
Support levels: 60.40, 59.33, 57.17.

EUR/USD: slowing vaccination in Europe affects the price

Current trend

The EUR/USD pair is declining, trading around the level of 1.1825.

The topic of vaccination in the EU remains in the spotlight of investors. Yesterday, the European Commission issued a statement, which notes that the regulator still cannot achieve the goal of ensuring timely access to vaccines for all citizens of the block. Also, it was noted that “legal consequences” were not excluded against AstraZeneca for failing to meet its obligations to supply the vaccine. As for the macroeconomic statistics, they were moderately positive. Manufacturing PMI in Germany for March rose to 66.6 points from 60.7 points for February, while the same indicator in France was 58.8 points, which is also better than the 56.1 points shown earlier.

The USD Index grows moderately, trading above 92.500 points. Yesterday, traders were focused on the speech of the head of the US Federal Reserve, Jerome Powell. The official has slightly changed the tone of recent days and said that financial incentives, most likely, would not be able to have a serious impact on inflation, and there was no need to fear its growth. Also, he noted that in the event of a strong rise in prices, the regulator had effective containment mechanisms.

Support and resistance

Globally, the price decreases within a wide downwards channel. Technical indicators maintain a global sell signal. Fast EMAs on the Alligator indicator are below the signal on, and the AO oscillator histogram trades in the sell zone.

Resistance levels: 1.1957, 1.2176.
Support levels: 1.1774, 1.1600.

GBP/USD: GBP wins back losses

Current trend

GBP is showing corrective gains against USD in today's morning session, developing the "bullish" signal formed the day before.

Technical factors are the reason for the strengthening of the instrument, while a further decrease in the yield of American bonds weakens USD.

In turn, yesterday USD received moderate support from macroeconomic publications in the USA. The revised data reflected the growth of the American economy in Q4 2020 by 4.3% YoY, which turned out to be 0.2% better than the forecast. The number of initial jobless claims for the week ending March 19 fell sharply from 781K to 684K, which also outstripped positive market expectations of a decline to 730K. Continuous jobless claims for the first time in a long time fell below 4M and consolidated at 3.87M after 4.134M in the previous period.

Today, the data on the retail sales in the UK for February is expected to be published.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is changing slightly, but remains rather spacious for the current level of activity in the market. MACD is trying to reverse upwards but preserves its previous sell signal (located below the signal line). Stochastic is showing similar dynamics, reversing upwards close to its lows and indicating the oversold GBP in the ultra-short term.

Resistance levels: 1.3760, 1.3800, 1.3857, 1.3924.
Support levels: 1.3700, 1.3650, 1.3600.

USD/JPY: the instrument is declining

Current trend

USD is significantly declining against JPY in trading in today's Asian session, retreating from record highs since June 2020 updated at the end of last week.

Technical factors remain the reason for the appearance of the "bearish" trend for the instrument, since the news background is quite calm. Investors take a lead from the controversial macroeconomic statistics from the USA on the dynamics of personal income and spending in February, as well as assess the prospects for further recovery of the global economy as the coronavirus pandemic recedes.

This week, traders will focus on the March report on the US labor market, which will be published on Friday. The recovery in the world's largest economy is expected to accelerate sharply and the unemployment rate is expected to retreat to 6%.

Support and resistance

Bollinger Bands on the daily chart are showing moderate growth, signaling strong "bullish" potential in the short and medium term. The price range is expanding; however, it fails to keep up with the surge of last week's buyers' activity. MACD indicator is growing, having formed a new buy signal (located above the signal line). Stochastic keeps its upward direction but is rapidly approaching its highs, which reflects the risks of overbought USD in the ultra-short term.

Existing long positions should be kept until technical indicators are clarified.

Resistance levels: 109.84, 110.23, 111.00.
Support levels: 109.37, 109.00, 108.61, 108.15.

XAU/USD: active downtrend

Current trend

Gold prices show active downtrend during today's Asian session, developing a "bearish" momentum formed yesterday.

On Monday, quotations of the asset fell by more than 1%, responding to the further strengthening of USD, as well as amid expectations of a further recovery in the global economy. The development of the downtrend for the instrument was also facilitated by technical factors of profit fixation at the end of the month.

At the same time, investors are cautious against the backdrop of an extremely alarming epidemiological situation in Europe. The largest economies in the region (Germany and France) are close to another tightening of restrictive measures, as the incidence rate is growing rapidly. All this is taking place against the background of low rates of vaccination of the population, as many European countries have suspended the use of the drug from AstraZeneca due to reports that it can cause thrombosis.

Support and resistance

On the D1 chart Bollinger Bands are reversing downwards. The price range is expanding; however, it fails to catch the surge of the "bearish" sentiment at the moment. MACD reversed into a descending plane, having formed new sell signal (located below the signal line). Stochastic keeps a confident downward direction but is already approaching its lows, which indicates the risks of oversold instrument in the ultra-short term.

Existing short positions should be kept until technical indicators are clarified.

Resistance levels: 1720.00, 1741.02, 1753.57, 1769.59.
Support levels: 1703.07, 1687.15, 1675.00, 1660.15.

GBP/USD: downward trend

Current trend

GBP is declining against USD in trading this morning session, developing a "bearish" momentum formed at the beginning of this week.

Investors are actively buying USD amid growing yields on US bonds and are responding positively to the pace of vaccination, which allows them to hope that most of the quarantine restrictions will be lifted soon. However, given the current crisis in the incidence rate in Europe, not all analysts are so optimistic. There is an opinion that a too fast economic recovery and the abandonment of most of the restrictive measures could lead the USA to a third wave of coronavirus, which judging by European indicators will not be weaker than the first two. The same can be said about the UK, where the rate of vaccination of the population is one of the highest to date.

Today, investors are focused on the updated statistics on the UK GDP for Q4 2020, as well as the March data on Nationwide Housing Prices.

Support and resistance

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is almost unchanged, but it remains rather spacious for the current level of activity in the market. MACD is declining keeping a weak sell signal (located below the signal line). Stochastic is reversing downwards again after a brief increase last week. The current showings of the indicator do not contradict the further development of the downtrend in the ultra-short term.

Resistance levels: 1.3760, 1.3800, 1.3857, 1.3924.
Support levels: 1.3700, 1.3650, 1.3600.

USD/CHF: updating record highs

Current trend

USD has shown moderate gains against CHF during today's Asian trading session, updating record highs since mid-July 2020. Market activity is gradually declining, given the upcoming Easter holidays, but investors are awaiting the publication of the US labor market report for March, which will take place on Friday. Market forecasts suggest a marked increase in the number of new jobs created by the US economy outside the agricultural sector. The unemployment rate may also decline and reach 6%.

Today the focus of investors will be on the statistics on business activity in the US and Switzerland in March, which will help assess the prospects for economic recovery.

Support and resistance

Bollinger Bands in D1 chart show stable growth. The price range expands, freeing a path to new record highs for the "bulls". MACD indicator is growing preserving a weak buy signal (located above the signal line). Stochastic is still in close proximity to its highs, signaling strongly overbought USD in the ultra-short term.

To open new positions, it is necessary to wait for the trade signals to become clear.

Resistance levels: 0.9466, 0.9500, 0.9540.
Support levels: 0.9417, 0.9350, 0.9300, 0.9250.

GBP/USD: updating weekly highs

Current trend

GBP is marginally strengthening against USD in today's morning session, ending the week at new local highs since March 23.

Market activity remains rather low due to the Easter holidays. Investors' interest is fueled only by the forthcoming publication of data on the US labor market for March. After an impressive report on private sector employment from ADP, investor optimism increased markedly, although the overall picture was smoothed by statistics on jobless claims. The number of initial jobless claims for the week ending March 26 increased from 658K to 719K, which turned out to be worse than the market forecasts of growth to 680K. The number of continuing jobless claims for the week ending March 19 decreased from 3.84M to 3.794M, while forecasts assumed a decrease in the indicator to 3.775M.

GBP positions on Thursday were supported by positive macroeconomic statistics on business activity in the UK manufacturing sector. Markit Manufacturing PMI rose from 57.9 to 58.9 points in March, which turned out to be better than the neutral forecasts of analysts.

Support and resistance

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing from above, reflecting the emergence of ambiguous dynamics in the short term. MACD indicator is growing preserving a rather stable buy signal (located above the signal line). Stochastic keeps its upward direction but is rapidly approaching its highs, which reflects the risks of overbought GBP in the ultra-short term.

Resistance levels: 1.3857, 1.3924, 1.4000, 1.4050.
Support levels: 1.3800, 1.3760, 1.3700, 1.3650.

USD/JPY: rising incidence of COVID-19 in Japan hurts the yen

Current trend

The USD/JPY pair actively strengthens, trading at the level of 110.65.

The weakening of the yen is due to the epidemiological situation. According to the Japanese Ministry of Health, the number of people infected with new strains of coronavirus is growing rapidly, and carriers of the British and African strains are already present in 34 out of 47 prefectures. Also, the first cases of detection of the Brazilian strain are reported. The government has not yet taken any steps regarding the new quarantine, as the country is undergoing pre-Olympic events that, if introduced, would be in jeopardy.

The US currency is holding at Friday's close levels, with little reaction to the news that the production of the AstraZeneca vaccine at the Baltimore plant has stopped. It was stopped by a personal decree of US President Joe Biden after 15M doses of the vaccine were spoiled at the plant due to a technological error in the manufacturing process. Earlier, the chief infectious disease specialist Anthony Fauci has already stated that the United States did not need a vaccine from this manufacturer, and soon its use might stop at all.

Support and resistance

The instrument moves within an uptrend and may rise again after a short-term correction. Technical indicators maintain a global buy signal. Alligator indicator’s EMA fluctuations range is quite wide, and the histogram of the AO oscillator moves in the positive zone.

Resistance levels: 110.90.
Support levels: 110.30, 109.30.

WTI Crude Oil: active decline amid OPEC+ decision

Current trend

The price of North American light oil, WTI Crude Oil, is moving within a corrective trend, trading at 59.30.

The instrument began to actively decline in response to Thursday’s news, when the OPEC+ members decided not to cut production further but, on the contrary, to increase its volumes. The plan, which was being prepared for January, was decided to be implemented now, and thus, energy production in May-June will increase by 350K barrels per knock, and in July – by 441K barrels. Also, Saudi Arabia decided to abandon its project to reduce the oil production, returning to a gradual increase in production volumes, which will rise by 250K in May, by 350K in June, and by 400K barrels per day in July.

The decline in the rate began only now, as on Friday world exchanges were closed due to the holidays, and full-fledged trading started only yesterday. Thus, the likelihood of further weakening remains quite high, despite the current drop in sales volumes.

Support and resistance

Locally, the price decreases within the local sideways channel, trading near the support line. Technical indicators are in the state of a sell signal. Alligator indicator’s EMA fluctuations range is directed downward, and the histogram of the AO oscillator is in the sell zone.

Resistance levels: 61.60, 66.30.
Support levels: 57.30, 52.50.