High Oil Prices Keeping USD Bid
Dollar Strength Holding
The US Dollar remains up off the week’s lows as traders monitor developments in the Middle East and shifting Fed expectations. There is still some confusion and lack of clarity over alleged US/Iran peace talks with Iran insisting that no dialogue with the US has taken place yet, though it is reviewing Trump’s peace proposal. Meanwhile, Trump has reportedly sent 2000 ground troops to the Middle East to further strengthen the threat of a ground invasion if a ceasefire is not achieved. For now, USD remains supported via higher oil prices with crude continuing to hold around $100 p/b. While energy prices remain elevated, USD should continue to grind higher. If we do hear news of a breakthrough in peace talks, however, USD could sink firmly as oil prices recoil.
Hawkish Fed Comments
Away from the Middle East and oil prices, we’ve heard some hawkish Fed commentary in recent days. Fed’s Miran, a well-known dove who has previously voiced support for further cuts said that he has lifted his end of year rate forecast as a result of inflation risks linked to the Iran war. This echoed comments from Fed’s Barr earlier in the week who warned that US rates may stay higher for longer as a result of higher energy prices and inflation risks. Looking ahead today, traders will be watching the latest US jobless numbers, expected at 211k up from 205k prior. If confirmed, or beaten, this should keep USD supported into the weekend though Middle East news will remain the stronger driver.
Technical Views
DXY
For now, the 99.15 level is holding as support with price still above the broken bear channel. In this light, focus remains on a continuation higher and a fresh attempt at breaking out above 100.36. If we push lower instead, however, focus will turn to 98.24 as the next support to watch.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 73% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.