Crude bulls have been given a strong uplift by the market on the back of a weaker US dollar and also private inventory readings showing a strong drawdown in crude from supplies. While this just a precursor for the main reading tomorrow, it’s a promising sign in the long run for suppliers of oil who continue to struggle to get decent prices in the market. The real will be tomorrow for price action amongst oil traders and expectations are high that strong technical trends will win through for oil markets. However, there could also be some slight fundamental action on the back of the Trump meeting in China, but it’s unlikely to make big waves in the oil market.
Oil continues to be in a bullish trend upwards, and thus far the market has been rewarding for the oil bulls compared to the previous month. The 100 day moving average has managed to stop oil traders in their tracks at present, but this could only be temporary if we are going to see a strong draw down tomorrow and resistance at 51.68 would be unlikely to hold it back. If it’s a strong draw down we could see price jump higher to 52.82 and extend even further if it was very large. In the even we don’t see a strong draw down price could drop further and test support at 49.70, so there is a number of angles the market will be looking to play off – and while the market does respond to technical’s, it does also tend to trend nicely after the announcement so it’s worth watching.
The Yen continues to be impressive in trading as of late, and there are many believe that the USDJPY is currently not a productive trade, but it has been on the largest movers and most volatile over the last week. Other pairs like the EURJPY and GBPJPY have also had large swings, but the market keeps looking for a hedge as it’s not impressed with the current Trump plans and how little has actually been done; despite all of the talk.
USDJPY traders have been looking to push lower, despite the market talking about buying opportunities. Until we some sort of political reprieve markets are likely to continue to hedge at this stage. So far support at 110.224 is looking quite strong and the 50.0 fib level is also acting as support around that key area. The 110 level is a psychological level that the market likes and so we could see continues pressure and support around it. If the market does indeed decide to flip it around a jump to 111.655 could also be on the cards. I would expect though that unless something fundamentally changes we could continue to see downward pressure and bearish trends for the USDJPY.