Sat, Jun 10, 2023 @ 22:07 GMT

The Dollar Fights Back

The deflated Dollar was instilled with inspiration on Tuesday following hawkish comments from FOMC member Harker that rekindled expectations of a March interest rate hike. Harker’s hawkish rhetoric has resonated with a growing chorus of Federal Reserve officials who have not ruled out taking action in spring and simply encouraged Dollar bullish investors to propel the Greenback above 101.50. Although the current March hike madness theme could uplift the Dollar higher in the short term, the visible lack of commitment to a timeline in raising US rates may swiftly cap upside gains. While the overall improving economic data and bullish sentiment towards the U.S economy could uplift the Greenback further, the ongoing Trump uncertainties and lack of clarity from the proposed fiscal policies could entice sellers to enter the scene.

Sterling struggles above 1.2400

Sterling has been gripped by political risk and further downside pressures should be expected once the formal Brexit negotiations commence. Bearish investors were on the offense on Tuesday after BoE Carney suggested that the rising inflation was solely attributed to a weak Pound. With the Brexit uncertainty being the main cause for Sterling’s painful decline, a sharp rise in inflation that has little to do with improving economic fundamentals may quell expectations of BoE raising UK interest rates anytime soon. The Sterling/Dollar remains under pressure on the daily charts and a breakdown below 1.2400 could open a path lower towards 1.2300.

Euro slides on political instability

The Euro found itself under renewed seller pressures during Tuesday’s trading session as investor anxiety over the rising Eurozone political instability heightened. Concerns continue to mount over Eurosceptic parties destabilizing the unity of the Eurozone and this has haunted investor attraction towards the currency. The threat of politician Marine Le Pen winning the upcoming election in late April has sparked jitters which continue to fuel the EURUSD parity dream. As of writing, the EURUSD has declined over 70 pips with bears currently eyeing 1.0500. From a technical standpoint, this pair is under extreme pressure on the daily charts and a breakdown below 1.0500 could encourage a further selloff lower towards the next relevant support at 1.0350.

Commodity spotlight – WTI Crude

Oil markets received a welcome boost this week with prices edging to seven-week highs as optimism over the output cuts boosted attraction for the commodity. The signs of OPEC remaining in compliance with the global pact to cut production continue to fuel hopes of the oversupply woes coming to an end. While oil prices could edge higher amid the supply cut optimism, the concealed concerns of U.S shale boosting oil production and negatively impacting OPEC’s efforts could create some headwinds in the future. WTI Crude exploded into gains on Tuesday as prices broke above the stubborn $54 resistance. If the momentum is sustainable, then the previous $54 resistance could transform into a support that opens a path higher towards $55.

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