Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Markets Nurse Hangover From Oil Slump

Published 06/27/2017, 04:50 AM
Updated 06/07/2021, 10:55 AM

World stocks regained some of their composure during Monday’s trading session with most markets edging higher after investors nursed their wounds from last week’s oil sell-off, which weighed on sentiment and soured risk appetite. Asian stocks marched into the green territory as participants diverted their attention away from depressed oil to optimism over global growth.

The upside momentum from Asia has already boosted European equities with Wall Street potentially finding some support this afternoon. Although the current stock market resilience may be viewed positively, stocks still remain exposed to downside risks, especially when considering how Brexit developments, continued uncertainty in Washington and depressed oil continue to weigh on sentiment.

Sterling bulls display exhaustion

Rising speculation of a potential rate hike from the BoE and reports of Prime Minister Theresa May reaching an agreement with the Democratic Union Party to form a government did little to support Sterling during Monday’s trading session. Price action suggests that the ongoing Brexit developments have left investors increasingly jittery and sellers have exploited this anxiety to drive prices lower.

Although sterling was initially gifted a minor lifeline after Theresa May secured a £1 billion deal with the DUP, the upside is likely to be limited by the Brexit negotiations. With uncertainty still the name of the game when dealing with Brexit and sterling, further downside should be expected moving forward. Technical traders may utilize the 1.2775 resistance level on the GBP/USD to drive the pair lower towards 1.2600.

Dollar oscillates in the background

Dollar bullish investors were lacking the inspiration to support the greenback on Monday amidst the absence of confidence of another US interest rate increase in 2017. Although Federal Reserve officials have consistently displayed optimism over the US economy and rate hike timings, the markets still remain unconvinced.

Investors may direct their focus towards the pending Core Durable Goods Orders report this afternoon, which may pressure the dollar further if numbers fail market expectations. From a technical standpoint, the dollar index is still at risk of trading lower if bulls fail to break above 98.00.

Commodity spotlight – WTI Oil

Oil prices struggled to maintain gains during Monday’s trading session as oversupply woes continued to haunt investor attraction towards the commodity. Although some of the major oil producing players have stepped forward and expressed willingness to maintain the current output cuts, this has fallen on deaf ears with WTI Crude finding comfort at depressed levels.

As the oversupply woes remain a dominant theme in the oil markets, any appreciation in prices may be treated as a technical bounce for sellers to start renewed rounds of selling. From a technical standpoint, a breakdown below $43 should open a path towards $42 and $40 respectively.

Currency spotlight: EUR/USD

The EUR/USD has been trapped in a 100 pip range for the past three weeks with support at 1.1130 and resistance at 1.1230. Although the current absence of political risk in Europe offered a solid boost to the euro, bullish traders are seeking fresh inspiration to send prices higher.

With the ECB’s President Mario Draghi speaking this evening, the EUR/USD could turn volatile especially if he reiterates his dovish mantra on ultra-loose monetary policy. From a technical standpoint, a break above the 1.1230 resistance or below the 1.1130 support level should determine the EUR/USD’s future trajectory.

Disclaimer: The content in this article comprises personal opinions and ideas and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.