Market analysis

Week 11 Data: Fiber and Oil Price Action Before the CPI Data

By Antreas Themistokleous

12 March 2024

exness-oil-4

This preview of weekly data focuses on EURUSD and USOIL, which are primarily influenced by economic data scheduled for release later this week, driving the near short-term market outlook. The most important economic data for this week are:

Tuesday:

British unemployment data for the month of January will be released at 07:00 AM GMT. It's expected to remain steady at 3.8%, with the claimant count forecasted to decrease to -2,000 for February, compared to the previous figure of 14,100.

The US inflation rate will be announced at 12:30 PM GMT. Expectations are for the figure to remain unchanged at 3.1%, with core inflation anticipated to decline by 0.2% for February. Inflation data is crucial at this point, with expectations of a Federal Reserve rate cut being continually deferred. A worse-than-expected inflation figure would likely delay the rate cut further, while a lower figure might increase the likelihood of an earlier rate cut by the Fed.

Wednesday:

British GDP growth figures for January are due at 07:00 AM GMT. The consensus is for an increase from -0.1% to 0.2% month-over-month. While this might not significantly impact the pound, as it could already be priced into the market, it will provide insights into the overall economic performance of the British economy.

Thursday:

The US Producer Price Index (PPI) for February will be released at 12:30 PM GMT. Market participants expect the figure to remain stable at 0.3%. If confirmed, this could indicate a potential slowdown in inflation, as producers' costs usually influence consumer prices, affecting inflation figures. Stability in these costs could suggest that inflation might not increase in the near short-term outlook.

EURUSD, Daily

Last week, the US dollar saw a significant decline, driven by decreasing US Treasury yields amid speculations that the Federal Reserve might reduce borrowing costs to support the US economy. By week's end, the DXY index fell by 1.10%, marking its worst performance since early December. A strong US inflation report could lead to a bullish repricing of the Fed's interest rate outlook, potentially boosting the US dollar, while a weak report may prolong the recent yield pullback.

On the technical side, EURUSD encountered resistance around the $1.095 price area, an early January reaction point at the upper Bollinger Band, coinciding with the 50% Fibonacci retracement level. The Stochastic oscillator is in the overbought zone, suggesting a possible downward correction in upcoming sessions. The 50-day moving average is still below the 100-day average, indicating that the recent pullback hasn't reversed the market's overall bearish momentum. This analysis points to a shorting narrative, with potential support around the $1.09 price area, aligning with the 61.8% Fibonacci retracement and previous price reactions.

USOIL, Daily

WTI crude futures hovered around $77 per barrel for three consecutive sessions amid cautious investor sentiment ahead of key US inflation data and reports from OPEC and the IEA. Concerns over demand, overshadowing OPEC+ supply cuts, led to a 2.45% drop in WTI prices last week. China's oil imports declined by approximately 5.7% in the first two months of the year, while major oil producers extended production cuts and ceasefire talks between Israel and Hamas showed limited progress.

Technically, USOIL found resistance at the upper band of the Bollinger Bands and has corrected downward, currently trading around $77.50. The first significant technical support level is at $76, marked by the lower Bollinger Band, the 100-day moving average, and late February price reactions. Strength at this level could lead to a retest of the $78 price area, the 38.2% Fibonacci retracement level, in the short-term outlook.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.