Euro bears received ample encouragement during trading on Thursday following Mario Draghi’s very dovish rhetoric towards the health of the Eurozone economy and this consequently sent the EURUSD sinking to fresh daily lows at 1.078 as of writing. In the press conference Draghi highlighted that slowing global growth and emerging market weakness has left the Eurozone exposed to downside risks, while plunging oil prices sabotaged the Eurozone’s 2% medium-term inflation target. Although it was widely expected that the ECB would remain on standby and keep rates unchanged today, the renewed optimism over the possibility of further QE amid the aggressive decline in oil prices has provided bearish investors with a chance to attack the EUR. The bearish sentiment towards the Euro has received reinforcement today and more downside may be expected as investors bet on the likelihood of the ECB unleashing further stimulus measures in March.
WTI gearing for a potential decline
The recurrent theme of an unrelenting oversupply of oil in the global markets has provided a foundation for bears to ruthlessly attack oil prices towards near 13 year lows at $27.60 during trading on Wednesday. This week has offered nothing but pain, with Iran’s sanction relief only intensifying the anxieties that oil markets could drown in oversupply and this has rapidly faded any opportunity of a recovery in value. Sentiment towards oil is immensely bearish and heightened concerns around the IMF slashing global growth forecasts, combined with China woes have boosted speculations that global demand may be fading. With ongoing geopolitical tensions between Saudi Arabia and Iran reducing any expectations around OPEC amicably cutting productions anytime soon, investor attraction towards WTI remains haunted and this should pressure prices further. From a technical standpoint, WTI is heavily depressed and a breakdown below $27.60 should encourage a further decline towards $25.
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