The US dollar closed Monday's session unchanged as earnings reports from Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) missed expectations, blaming the US economy.
Risk appetite turned to neutral mode following light trading, allowing equities investors to take a breather before increasing bets - either before or after Easter break.
Euro Bulls Fail As All Eyes Shift To German ZEW
EUR/USD bulls attempted to break to fresh highs on Monday but failed as they stumbled upon a big psychological resistance at $1.13. With a muted dollar, a light calendar and a relatively slow start to the week, euro traders decided to trade small. Right now, they are patiently waiting for the critical ZEW economic data due to be released. Analysts expect German and euro area sentiment to leave recessionary levels after a depressing period of over one year.
Rejected At $1.13, A Deeper Correction Is Now Possible
It has been a good run for the EUR/USD since the double bottom down at $1.1180. Euro rode 140 pips in an impulse move to the upside and received a rejection as the 1.618 Fibo extension at $1.1322 and the upper channel trendline rejection weighed prices down. Since then, the popular pair started correcting down to $1.1289 with the first leg (A to B) suggesting a deeper correction towards $1.1269, or lower.
Aussie Slips Lower On Dovish Comments From RBA Minutes
AUD/USD started the week on a similar note to EUR/USD but overnight trading amid RBA's minutes pushed the currency pair 0.4 percent down. Tuesday's flows started coming through after the central bank said that since inflation remained stubbornly neutral and unemployment rose a “decrease in the cash rate would likely be appropriate”.
Bearish Push Now Supported From Fundamentals Too
Aussie bulls had a go at the last upside move near $0.72 last week and failed. Monday's attempt was even more piteous. With a confluence between the long-term descending trendline (yellow) and the short-term ascending trendline (red) weighing in on prices, the currency pair could head lower towards the golden ratio near 71c. barrier. However, a downside break outside the short-term ascending channel must take place first.
WTI Marginally Lower On News Around Production Cut Deal
Crude oil fell on Monday despite Libya's production remaining under threat and regardless of tightening supplies. Russia's minister, Anton Siluanov, hinted at a market share fight between Russia and OPEC, against the United States. The Russian finance minister's comments indicated that the production cut deal may be abandoned in order to allow prices to fall. That would "shrink" American output.
Oil Could Correct, But No one Knows Where To
The prices of crude oil also saw a rejection near a psychological level. Bears stepped in just before the $65 per barrel barrier and caused a short-term correction that could lead prices further down. In the unlikely scenario that the middle trendline (red) holds, WTI would most likely move higher either for a double top of continuation of the bullish trend. However, a slide down to the lower trendline of the ascending channel (grey) is also possible in the short-term.