What will Fed comments mean for U.S. Dollar and crude?

U.S. Dollar Index (NYBOT:DXM14)

The U.S. Dollar Index has been relatively flat ahead of today’s GDP and FOMC announcements anticipated to be released at 7:30 AM and 1:00 PM CT respectively. The dollar seems to be in a bit of a holding pattern following a potential double bottom formation around 79.373. The market has rallied a bit, only to reject from the 50% retracement level of the range and technical resistance around 80.055. Look for this level to be the key pivot keeping price in check going into today’s reports.

If price can push above this resistance pivot on the chart, consider the 80.123, 80.160 and 80.234 areas as potential near-term resistance levels in the dollar. The most relevant area of support will likely come into play around the lows put in earlier this week around 79.650. Below here, the 79.373 low will likely be the final level of support keeping the dollar afloat. Due to the congestive nature of price over the past few weeks, it is difficult to get a “read” on the current momentum in the dollar.

Furthermore, today’s economic data is going to be the primarily driver behind trading today so traders should head into today’s session with a plan and continually monitor key technical levels for opportunity.
 

U.S. Dollar 30-minute Bar Chart (e-Signal)

 

Crude (NYMEX:CLM14)

Aside from the GDP and FOMC announcements today, there is also an EIA Petroleum Status report at 9:30 AM CT, which will likely inject some volatility into the crude market later today. Prices have down a bit since the 4/16 peak and near-term momentum appears to be favoring the bears at this point. The overnight weakness in crude appears to have found temporary support at the 38.2% retracement level (shown as 61.8%) around 100.14. This level has been relevant in the past and has the potential to hold as support heading into today’s number. Any weakness below here could see follow through down to the 98.92 – 99.09 area, especially if there is a higher-than-anticipated build in inventories. Geopolitical tensions continue to loom overhead in the crude oil market; however, with the apparently diminishing threat of war of between Russia and Ukraine, it seems as though prices of crude oil have given back some of the “war premium” that was previously priced into crude.

All things considered, the EIA number will likely be the talking (and trading) point for today’s session. In the event of a bullish number, consider the 101.38 level as potential initial resistance, followed by the 102.06 – 102.21 area.

Crude Oil 30-minute Bar Chart (e-Signal)

 

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