Fed On Watch
Oil prices are falling midweek as traders await the Fed rate decision tonight nervously. With risks that USD moves higher in response to any hawkish surprises tonight, risk sentiment is at risk of deteriorating through the end of the week. A cut from the Fed is prices in at this point so the greater focus will be on the guidance issued by the bank. If Powell fails to deliver for doves, USD could see a knee-jerk reaction higher which is likely to hamper risk assets across the board. Additionally, traders will be watching next week’s incoming NFP data sets with any upside surprises in that data likely to further amplify any risk off move we see on the back of the FOMC.
Russia-Ukraine
Alongside the Fed and USD moves, traders are also keeping an eye on the Russia-Ukraine situation. Diplomatic efforts to establish a peace agreement between the two warring countries have been stepped up in recent months, spearheaded by the US. This week, European leaders have agreed to increase pressure on Putin to help drive the Russian leader towards calling an end to the war. For oil prices, the market has been moving lower in response to any positive news and rising optimism around peace prospects. On the other hand, any fresh escalation in violence or breakdown in peace efforts has led to a jump in oil prices. As such, incoming news flow around the issue remains a key driver for price action.
Technical Views
Crude
For now, crude prices remain anchored around the 57.57 base with risks of a downside break growing while price remains below the 61.39 level. If we do break lower, the 55.07 YTD lows will be the key support to watch with 51.31 the deeper level to note. Topside, bulls need to get back above 61.39 to alleviate downside risks and put focus on a test of 64.42 next.
.png)
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. 73% and 72% 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.