It has been a slow start to the week with the focus being on China and upcoming economic data, but during the holiday periods there can be still be some strong ups and downs. Clearly today was a case of USD weakness as traders looked to take some profit on the events of last week, and before US home sales data came into focus during the week. One of the main concerns for the US dollar bulls has been the comments from the FED on the flattish nature of the yield curve in bond markets, which many believe is a signal of a future recession or at least the marketing anticipating that good things must come to an end. Either way it has made some at the FED a little dovish in recent comments, and made USD bulls a little more cautious in recent times.
One of the interesting movers today has been of course the GBPUSD which has crept back up the charts on the back of the recent USD weakness, as a result the market is now focused on seeing if it could potentially puncture through resistance at 1.2798. If that were to occur then we could see further movements to 1.2958, but I would be very cautious given the recent Brexit negotiations, and additionally the hard Brexit threat which continues to hang over the head of the Pound. If markets are keen to head south again under the weight of the bears then certainly support at 1.2652 is likely to come under immense pressure, especially if markets felt a no deal Brexit was on the cards.
The other key mover today and one to watch has been of course crude oil which has continued to move up the charts at a steady pace after recent events. I certainly feel that oil above 70 dollars a barrel is unlikely anytime soon and we may see some serious pressure around this level, but that's not to say the bulls are not in control. After the strong bounce at 63.98 coupled with the bullish trend line the market is continuing its bullish moves higher so far, but with support shortly away at 66.03 the market will be looking to see if this move has any legs. If there is more of a bullish push then resistance at 67.45 and 69.38 are likely to be key for traders. The 20 day moving average should also be watched closely here given that it has thwarted bulls in the past, so expect dynamic resistance as well.
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