Gingerly trading ahead of ECB meeting

In early trading today the US dollar and the Japanese yen recorded a slight rise against other major currencies following the drop in oil prices and the  Asian stock markets.

The subsequent stabilization of stock markets in Europe turned back a part of yesterday's risk appetite in currency markets, parrying the appreciation of both major currencies.

The euro consolidated between 1.1350 and 1.1388 US dollars, as investors' attention is focused on tomorrow's regular meeting of ECB. Although it is not expected the central bank to make changes in its stimulating monetary and interest rate policy, Mario Draghi’s press conference is widely awaited with interest, because he will most likely confirm that the central bank stands ready to take further measures if necessary.

The decline in Asian markets and negative start on European stock markets initially led to a fall of the US dollar to 108.77 yen and of the euro to 123.54 yen before the subsequent stabilization of the capital markets in Europe returned USD and EUR to respectively 109,37 and 124,33 levels.

A new dawn

It’s a new dawn, it’s a new day and the oil market is surfing over a new wave.

The Doha failure pushed crude prices down, but some advantage
was taken due to a worker strike in Kuwait.
The collapse was limited by the sharp decline in production in Kuwait meaning that the production in the Gulf dropped by 60% (1.7 mln barrels per day) - slightly more than the surplus flooded world markets in the first half of the year.

But this will affect prices only in the short term. When exports from Kuwait will be completely renewed, the market will once again focus on the ongoing oversupply, which amounts to about 1-2 million barrels per day.

Technically speaking crude oil is facing major resistance at $40.40.
The self-able commodity presented with strong mambo steps on the ballroom market,
recovering from the nailed low at $37.65.      
Hammerlock position will stay closed within the rhythm as long as the resistance at $40.40 keeps the beat on. If the next step would break the support located at $39.40, we may meet the $38.80-$37.16 target.

Diesel and dust

Doha soundtrack crackled with shifting sounds and broken plans.

The global oil producers failed to agree on cutting crude output.

The optimism disappeared when Tehran announced that will not accept these bans,

as Iran screamed to the world after years of economic isolation cut.

Shortly after the meeting in Doha oil prices fell with nearly 8% to $37.60.

Black gold started trading with a decline of $3, Brent even dropped to $40.85.

So the agreement on an output freeze deal into dreamland turns,

but frankly isn’t it a wicked game that the oil market burns

than if there was no meeting at all.  

Bullroars can not be heard in a knock-em-down storm.

EUR/USD in weekly perspective

During the past days the euro crossed the borderline, failing to keep gains and the positive sentiment disappeared. EUR/USD stepped back from the six month highs and in the near future it seems that bears are coming back. 

The cradle of macro news in Europe will be rocked on Tuesday with the euro zone's current account for February and the ZEW report for April.The figure that might cause much stronger volatility is Mario Draghi, who will speak on Thursday’s ECB meeting.  PMIs for April will be presented on Friday.

US macroeconomic agenda has not much to show next week. On Monday evening NY Fed president will speak about trans-Atlantic divergence. Housing starts and building permits for March data will be due on Tuesday. On Thursday will be reported data on jobless claims and Philadelphia  Fed manufacturing and major indicators. I guess not enough significance to turn on the US dollar.

Within the past week the US dollar showed up with a mighty vision as the pair stirred out from the  consolidation zone located between 1.1330 and 1.1440. 

GBP/USD

GBP/USD was grasped by bears on Wednesday and the beating continued today, when earlier in the morning the pair hit $1.4120.

The pound slipped with 0.45% and is trading close to intraday lows around $1.4135. An impulse to the shaky pound was set by the rising frustration of Brexit misgiving.

Some more volatility is expected later on today during the US session.

On the agenda for the day regarding the macroeconomic news, major event is the Bank of England meeting. It is supposed that BoE will leave monetary policy unchanged, along with the main interest rate pinned at 0.5% and the annual pace of QE planned to remain at £375 billion.

The sentiment for the pair remains bearish and we may expect testing of the first support at $1.4100. Immediate resistance is seen at $1.4175 followed by $1.4240. A clear break above that area could lead price to neutral area testing $1.4280. 

To be a rock and not to roll

This passage evokes so many interpretations, 

but what I would label it now is stable.

China’s economy showed a sign of some stabilization,

that woke up the bulls and make them able 

to uplift the European indices and send them to profound elevation.

DAX 30 finished today 2.71% higher reaching 10,026.10 points, 

FTSE 100 jumped with 1.78% and crossed the finish line with 6,353.52 points.

CAC 40 flyed away with 3.32% to 4,490.31 points 

and Euro Stoxx 50 closed with a gain of 3.26% at 3,038.12 points.

The optimism glittered mostly over DAX, 

that was tagged on the stairway of April’s highs.

Above estimates

The new figures from ONS today showed that the UK inflation rate has increased above expectations in March.

CPI is uplifted by 0.5% in March, above the estimates of 0.4% and above February’s

0.3%. The rate has been increasing very softly since October 2015 regardless of the fact that in historical overview, the rate is still low.

The main engine of the rises is the airfreight, along with clothing prices.
Amid the positive data GBP/USD is trading above $1.43 as the pound leaped with 20 pips upon the news.

The intraday technical outlook is positive, following the bullish momentum from yesterday, topped at $1.4286 and while staying above the support located at $1.4200. A stronger resistance could be found at $1.4260 and breaking above it should retarget $1.4320 and most likely $1.4350 in short-term.