Despite OPEC+ announcing production cuts, oil traders remained unconvinced, leading to a nearly 3% drop in oil prices overnight. The effectiveness of these cuts is questionable as they are being implemented on a “voluntary” basis. Notably, Angola rejected the measure, expressing dissatisfaction with the production quota allocated to it. At the same time, the strength of the US dollar is being challenged, especially after the release of US PCE data that showed signs of easing inflation. This reduces the likelihood of further rate hikes by the Federal Reserve. In contrast, US equity markets posted a robust performance in the best month of 2023. The Dow Jones, in particular, led the way, reaching its highest level since January 2022.
Dollar Index
The U.S. dollar is staging a comeback as investors engage in bargain buying following inflation data that came in line with expectations. Meanwhile, better-than-expected U.S. initial jobless claims are also contributing to the dollar’s resurgence, reflecting a solid labor market and boosting confidence in the greenback.
The Dollar Index is trading higher after breaking above the previous resistance level. The MACD is showing increasing bullish momentum, while the RSI is at 62, suggesting that the index may extend its gains as the RSI remains above its mid-line.
Resistance level: 104.05, 104.55.
Support: 103.25, 102.50.
GBP/USD
The Cable has found support after a brief technical retracement above the uptrend resistance level. The U.S. Dollar fell after the release of the U.S. PCE, which was in line with market expectations and indicated a moderation in U.S. inflation. This economic data has convinced the market that the probability of further interest rate hikes by the Federal Reserve has diminished.
The Cable found support after a technical retracement and is still trading at an elevated level, indicating that the bullish bias remains. The RSI has dropped from the overbought zone while the MACD has dropped towards the zero line, indicating that the bullish momentum has faded dramatically.
Resistance level: 1.2729 1.2815.
Support: 1.2630, 1.2528.
EUR/USD
The euro is under downward pressure as Eurostat data showed that the euro-zone inflation rate slowed to 2.40% on an annual basis in November 2023. This figure is down from 2.90% in October and is below market expectations of 2.70%. The drop in inflation puts renewed focus on the European Central Bank‘s 2% target, suggesting a potential shift in monetary policy.
EUR/USD is trading lower after the previous retracement from the resistance level. However, the MACD is showing diminishing bearish momentum, while the RSI is at 36, suggesting that the pair may be entering oversold territory.
