The diminishing expectations that global demand for oil would pick up in the near term, resulted in a hefty decline in WTI which lasted for three consecutive days last week. Some recent soft data from China illustrating a considerable decline in exports and imports in October has renewed fears about China growth, and this will continue to threaten WTI bulls. WTI remains technically bearish and prices may remain depressed as oversupply and diminishing demand sabotage any opportunity for bulls to bounce back. Currently, WTI bears antagonize the $44.00 support and if this level submits to the pressures, then there may be a clear path to the $42.00 level.
A slew of soft economic data from Europe in November has exposed the Eurozone to downwards pressures. The European Central Bank has been in a constant bout to achieve its 2% inflation target against falling commodity prices and China’s economic deceleration. Friday’s splendid NFP release did provide some relief to the ECB, as a strong USD against the EUR induced the right environment for European exporters. Regardless the Central bank still remains under pressure and a dovish Mario Draghi may further QE in the future as a tool to promote domestic economic growth within the Eurozone. There also exists another possible scenario in which the European Central bank waits for the Fed to hike US rates before moving forward in 2016.
The Bank of Japan’s (BoJ) refusal to expand stimulus measures to boost its ailing economy has left most investors bewildered. Japan has been exposed to an extended period of pressure which is reflected in the diminishing CPI y/y rates. Falling commodity prices and emerging market weakness have stalled any possible attempts for its 2% inflation target to be achieved in the first half of 2016. Exports for September declined sharply following a steep drop in Shipments from China. China’s deceleration remains one of the factors which continues to threaten Japans GDP growth with fears already mounting that Q3 GDP may miss expectations, resulting in a technical recession. Whilst Kuroda defends his decision to keep policy unchanged, the Japanese Q3 GDP which will be released on the 16th of November may force the BoJ to act in the next policy meeting in December.
The EURUSD is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. A breakdown below the 1.0700 support may open a path to the next relevant support at 1.0550.
The USDCHF is technically bullish on the daily timeframe. Prices are trading above the daily 20 SMA and the MACD has crossed to the upside. A breakout above the 1.0100 resistance may open a path to the next relevant resistance at 1.0250.
The USDJPY is technically bullish on the daily timeframe. A breakout above the 123.50 resistance may open a path to the next relevant resistance at 125.00.
The GBPUSD is technically bearish on the daily timeframe. The breakdown below the 1.5100 support has opened an opportunity for a further decline to the 1.4900 level. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside.
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