Crude Oil Maintains Positive Trajectory
West Texas Intermediate (WTI) oil price grapples to continue its gains for the second consecutive session. The strength in crude oil prices is attributed to the recent development of the Medium-term Lending Facility (MLF) rate cut, along with the decline in US Crude Oil stockpiles. As a result, oil maintains its position in the positive territory, trading above $76.00.
WTI Crude Oil Daily Chart
The recent MLF rate cut has contributed to the strengthening of crude oil prices. This economic measure, coupled with a marked decrease in US crude oil inventories, has provided a favorable environment for oil prices to thrive.
In light of the current market situation, the recommendation for the Crude Oil (WTI) asset is a buy. The entry price or pivot point is set at 74.80, with target and take profit levels at 76.30 and 76.70 respectively. This strategy takes into account a risk level of 1% per trade, applicable for the intraday period in the spot market. According to the Relative Strength Index (RSI), a new upleg is being called for.
EURUSD Under Pressure
The Euro/US Dollar (EUR/USD) exchange rate is currently under significant pressure. As per the latest updates, the EUR/USD trades lower near 1.0880 during the early European session on Thursday, with the US Dollar making efforts to retrace its recent losses. Interestingly, the EUR/USD pair is juggling near 1.0888 in anticipation of the European Central Bank’s (ECB) interest rate policy decision.
EURUSD Daily Chart
Market Analysis and Forecast
In light of these developments, the recommendation for the asset EUR/USD is a sell. The entry price or pivot point is set at 1.0900, with target and take profit levels at 1.0865 and 1.0845 respectively. This strategy takes into account a risk level of 2% per trade, applicable for the intraday period in the spot market. The Relative Strength Index (RSI), a key momentum indicator, shows downside momentum which further supports this stance.
Economic Indicators and Market Sentiment
The USD Index is consolidating near 103.30 ahead of the US GDP data, while the S&P500 futures have posted some gains in the European session, indicating some recovery in the risk-appetite of market participants. Investors are anticipating that the US economy expanded by 2.0%, which would be the lowest growth rate since 2Q2022. This slowdown in growth rate could ease consumer inflation expectations and boost hopes of an interest rate-cut by the Federal Reserve (Fed) in March.
On the Eurozone front, investors await the ECB interest rate decision. The ECB is expected to maintain the main refinancing operations rate unchanged at 4.5%. Last week, ECB President Christine Lagarde commented that the central bank could start reducing interest rates from late Summer, warning that inflation is high from where the ECB wants.
As the trading day progresses, the EUR/USD pair continues to experience pressure. While the current recommendation is to sell, it’s crucial for traders to stay updated with market news and adjust their strategies accordingly.
GBP/USD Steadies Above 1.2700 As Markets Await US Data
The GBP/USD pair holds steady above 1.2700 following Wednesday’s volatile action. As markets remain cautious, the pair’s upside is limited ahead of the fourth-quarter Gross Domestic Product (GDP), Durable Goods Orders and weekly Jobless Claims data from the US. Despite a downward correction in the American session, the GBP/USD managed to post daily gains by stabilizing above 1.2700.
Early January PMI data from the UK indicates that the private sector’s economic activity continued to expand at an accelerating pace. “The surprising strength of growth in January, which has exceeded forecasts, may deter the Bank of England (BoE) from cutting interest rates as soon as many are expecting, especially as supply disruptions in the Red Sea are reigniting inflation in the manufacturing sector,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence Supply.
Meanwhile, PMI data from the US painted a similar picture, with the S&P Global Composite PMI rising to 52.3 from 50.9 in December. This resulted in the USD finding support and capping GBP/USD’s upside.
Upcoming Data Release
The US Bureau of Economic Analysis will soon release the first estimate of the real GDP growth for the fourth quarter. Markets expect an annualized expansion of 2%, following the 4.9% growth recorded in the previous quarter.
Given the current market scenario, the recommendation for the GBP/USD asset is a sell. The entry price or pivot point is set at 1.2740, with target and take profit levels at 1.2695 and 1.2675 respectively. This strategy takes into account a risk level of 2% per trade, applicable for the intraday period in the spot market. The Relative Strength Index (RSI) currently indicates a mixed to bearish sentiment.
While the GBP/USD pair remains steady above 1.2700, it’s crucial for traders to stay updated with upcoming US data releases and adjust their strategies accordingly.
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