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Crude oil prices got a reprieve as the commodity logged gains on Tuesday. WTI crude oil prices rose over 4.0% on the day on Tuesday. In an interview, an oil minister from Equatorial Guinea said that OPEC members prefer prices to be around $60 – $70. The comments come ahead of the semi-annual OPEC meeting which could be scheduled in July. The prevailing narrative is that OPEC will continue with its production cuts.

Can WTI Crude Oil Maintain the Gains?

After oil prices surged to the upside, the breached trend line suggests there is further scope for gains. However, price action will need to close convincingly above 54.42 to confirm this bias. The next main target to the upside is at 57.50 where resistance is most likely to form. To the downside, failure to breakout above 54.42 could lead to oil prices drifting sideways, supported above the 51.70 floor.

The euro fell sharply on Tuesday. ECB President Draghi announced fresh stimulus and a possible rate cut, as early as July. Draghi said that some of the measures that the ECB could take include extending the time frame for the next rate hike and even cutting the ECB rates. The comments came during Draghi’s speech at the ECB conference in Sintra, Portugal.

Will the EURUSD Drop Further?

After the failure to hold on to the support at 1.1200, the single currency broke past this level, falling to a two-week low. Price action could remain somewhat volatile ahead of today’s Fed meeting. With the markets already discounting a dovish Fed, the element of surprise could dictate the flows into the USD. EURUSD’s next main support is seen at 1.1150 to the downside.

The day that investors have been eagerly awaiting in anticipation for at least the past month is finally here.

The latest Federal Reserve interest rate decision will be announced this evening, where there is an air of euphoria and excitement in financial markets that the Federal Reserve will begin preparing investors for lower interest rates in the United States over the second half of the year and potentially into 2020.

But what if Federal Reserve Chair Jerome Powell spoils the party for investors? It has already been baked into market expectations that the Fed will provide guidance of an upcoming future change in US interest rate policy and it's moments like these where investors can suddenly need to buckle up tightly and prepare for a potentially wild ride.

Let's put this into a different perspective. If we go back to roughly 2014, this was when the Federal Reserve first started to provide guidance of a potential change for higher interest rates in the United States. The first move higher however, in fact didn't occur until towards the end of 2015. So in reality, the Federal Reserve went up the lift very slowly but today, markets are ambitiously expecting the same central bank to jump down the escalator?

After close to 10 increases in US interest rates over the past couple of years at a gradual pace, I find it hard to believe that it will be that easy for the Federal Reserve to do two things - wave the flag and surrender, then put the car into reverse gear and accelerate downhill.

Today's Fed decision can set the tone for market sentiment into next decade

Make no mistake, today's Federal Reserve decision and the tone that it sets in its statement runs the risk of dictating how financial markets will perform into the next decade.

If the Federal Reserve does obey market expectations and issues the requested guidance that US interest rates will be lowered, this will flatten forecasts for the USD. A Dollar that is anticipated to slide downhill on lower US interest rate expectations means a stronger Euro, Yen and pretty much everything else!

Where a weaker USD will be warmly applauded and even possibly welcomed with a standing ovation is in emerging markets. The prospects of foreign flows returning into emerging markets would mean at the very least a stronger Malaysian Ringgit, Indonesian Rupiah, Philippine Peso and Chinese Yuan. Stretching further than the Asian region, the feel-good factor of a weaker USD would also mean good news for the likes of the South African Rand, Russian Ruble and even further afield, the Mexican Peso.

Avengers assemble ahead of "extended" meeting between Trump-Xi at G20

US-China trade disputes have been a very long-winded movie for financial markets. Think of it as a Marvel movie, in which trade tensions are very much the villain of the story for market sentiment.

This is why investors are excited at the news that US President Donald Trump and Chinese President Xi Jinping will have an "extended" meeting at the G20 summit in Japan later in June. Viewers want a happy ending to a very long story and are hoping that Captain America and Iron Man will come to the rescue and save investors from the persistent villain - the trade tensions.

The feel-good factor stemming from anticipation that there will hopefully be a resolution has fuelled a rally across emerging market currencies on Wednesday morning. The Korean Won, Philippine Peso, Indonesian Rupiah, Chinese Yuan and Malaysian Ringgit are all stronger against the Greenback.

Daily Pivots: (S1) 1.3357; (P) 1.3395; (R1) 1.3416; More...

A temporary top is in place at 1.3432 in USD/CAD and intraday bias is turned neutral first. Another rise remains in favor with 1.3328 minor support intact. Above 1.3432 will resume the rebound from 1.3239 to 1.3564 resistance next. On the downside, below 1.3328 minor support will turn intraday bias back to the downside for 1.3239 support instead.

In the bigger picture, outlook is turned mixed after USD/CAD drew strong support from 55 week EMA (now at 1.3232) and rebounded. Nevertheless, sustained break of 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685, is needed to confirm resumption of up trend from 1.2061 (2017 low), towards 1.4689. Otherwise, medium term outlook will stay neutral first. Break of 1.3239 will revive the case of medium term topping at 1.3664. And, decisive break of 1.3068 cluster support (38.2% retracement of 1.2061 to 1.3664 at 1.3052) will confirm and pave the way to 61.8% retracement at 1.2673 next.

Daily Pivots: (S1) 0.6845; (P) 0.6863; (R1) 0.6895; More...

A temporary low is formed at 0.6831 in AUD/USD and intraday bias is turned neutral. Some consolidations could be seen but upside should be limited below 0.7022 resistance to bring fall resumption. On the downside, below 0.6831 will extend the decline from 0.7295 to retest 0.6722 low.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

EUR/USD

Current level - 1.1193

The intraday bias is bearish, as the market awaits FOMC's decision later today. Initial target lies at 1.1110 low and crucial on the upside is 1.1250.

USD/JPY

Current level - 108.23

The outlook here remains neutral within the 109.05-107.70 range.

GBP/USD

Current level - 1.2556

There is a minor reversal at 1.2500 and although there is a risk of a further rebound to 1.2600 area, the bias is negative, for a final dip to 1.2420 area. Initial minor resistance lies at 1.2570. Key hurdle on the senior frame is 1.2650.

Daily Pivots: (S1) 108.10; (P) 108.40; (R1) 108.74; More...

USD/JPY is staying in consolidation from 107.81 and intraday bias stays neutral for the moment. In case of another recovery, upside should be limited by 109.02 support turned resistance to bring fall resumption. On the downside, sustained break of 61.8% retracement of 104.69 to 112.40 at 107.63 will pave the way back to 104.62/9 key support. However, break of 109.02 support turned resistance will indicate short term bottoming and bring lengthier consolidations first.

In the bigger picture, decline from 118.65 (Dec 2016) is still in progress, with the pair staying inside long term falling channel. Break of 104.62 will target 100% projection of 118.65 to 104.62 from 114.54 at 100.51. For now, we'd expect strong support above 98.97 (2016 low) to contain downside to bring rebound.

Daily Pivots: (S1) 0.9973; (P) 0.9993; (R1) 1.0021; More...

Focus remains on 1.0008 support turned resistance in USD/CHF. Decisive break will indicate completion of fall from 1.0237 and turn bias to the upside for 1.0098 resistance first. Rejection by 1.0008, followed by break of 0.9925 minor support will turn bias back to the downside for 0.9854 support.

In the bigger picture, USD/CHF's break of long term trend line support is the first indication of medium term reversal. That is, rise from 0.9186 (2018 low) could have completed at 1.0237 already). Sustained break of 38.2% retracement of 0.9186 to 1.0237 at 0.9836 will confirm and target 61.8% retracement at 0.9587. However, strong rebound from 0.9836 will revive medium term bullishness for 1.0237 and above.

Daily Pivots: (S1) 1.2520; (P) 1.2543; (R1) 1.2580; More....

A temporary low is formed at 1.2506 in GBP/USD and intraday bias is turned neutral first. Some consolidation could be seen but recovery should be limited below 1.2763 resistance to bring fall resumption. On the downside, below 1.2506 will extend the fall from 1.3381 to 1.2391 low. Decisive break there will confirm resumption of larger down trend.

In the bigger picture, medium term decline from 1.4376 (2018 high) is possibly ready to resume. Decisive break of 1.2391 would target a test on 1.1946 long term bottom (2016 low). For now, we don't expect a firm break there yet. Hence, focus will be on bottoming signal as it approaches 1.1946. In any case, medium term outlook will stay bearish as long as 1.3381 resistance holds, in case of strong rebound.

Ethereum is coming under slight downside pressure after the second largest cryptocurrency by market capitalization failed to break the May trading high. The bearish pattern on the four-hour time frame has yet to be invalidated, leaving the ETHUSD pair vulnerable to more losses. Overall the next strong directional move is unlikely to occur until the $230.00 to $280.00 price range is broken.

The ETHUSD pair is bullish while trading above the $260.00 level, key resistance is found at the $280.00 and $320.00 levels.

If the ETHUSD pair trades below the $260.00 level, key support is found at the $230.00 and $205.00 levels.