The Dollar, EURUSD, Oil and Gold outlooksPosted on Monday, March 27 2017 at 7:45 pm GMT+0000
USD: Fall after the healthcare vote in US House.
The dollar fell across the board late on the US session on Friday following the news that the House pulled the health care vote, and continued its decline during todays’ Asian and European sessions.
Repealing and replacing Obamacare was one of Trump’s major election campaign promises and his inability to pass the new healthcare bill is raising concern on whether his other more important plans on tax cuts and stimulus measures will get executed smoothly.
I think the greenback will remain weak until new stimulus emerges, and currently it may continue declining across the board.
EURUSD: reaches four-months high.
The euro rose to a four-month high against the dollar during today’s session, benefiting from the dollar’s weakness, and also supported by the positive political and economic prospects in Germany.
On the political side, CDU party’s victory in German regional elections supported the euro. Because it’s German Chancellor Angela Merkel’s party, and so its win in the western state of Saarland on Sunday boosted her prospects of winning a fourth term in September’s national election.
The German IFO Index reached its highest level in six years offsetting expectations, what helped the euro edging higher.
The recent break above the 1.0820 barrier canceled the bearish scenario, and as long as the dollar remains weak, the euro may head towards the 1.1030 level.
Oil: falls despite commitments to cut output.
Oil extended losses after the OPEC meeting over the weekend, touching $ 47.30 per barrel, as a result of raising inventories and refineries in the United States.
Despite pledges from OPEC producers to cut output and extending the process beyond June, inventories rose last week to an all-time high reaching 533 million barrels and refineries rose to 632, the highest figure since September 2015.
I expect this path to continue until major producers, including Russia and the United States, attempt new solutions.
The new support areas range from 46.50 to 44.80.
Gold: Rising due to risk aversion.
Gold opened the trading session with a positive price gap and rose hastily to reach its three-weeks high at 1258.
Risk aversion in the markets increased demand for safe haven assets, such as gold and Japanese yen, after the US healthcare system voting news.
Gold is currently testing the previous highs around 1264, and the 1260 remains significant, so we may see a pullback towards the 1245-1235 area in the medium term, but in the long term it should be noted that any breach of 1264 would signal the beginning of a Bullish path, raising expectations for forthcoming higher moves targeting 1306 and perhaps 1370 levels.