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WTI oil price fell 3% and hit the lowest levels since late December 2021, in early Monday’s trading.

The sentiment remains weak and was further soured by Sunday’s protest in Shanghai over China’s strict Covid measures, boosting concerns about further weakening of demand, as China is world’s biggest oil importer.

Investors also focus on upcoming OPEC+ meeting on oil output, due on Dec 4 and the impact of G7 decision to cap price on Russian oil.

Markets fear on lack of signals that oil producers would cut output and contribute to tighter oil market, as well as the US decision to not start reloading its strategic reserves that would add pressure to already bearish oil market and push the price further down.

The WTI contract is on track for a heavy monthly losses in November (around 15% so far) and entered the fourth consecutive week in red.

Last Friday’s and weekly close below Fibo support at $78.48 (76.4% of $62.42/$130.48) generated additional negative signal,, as bearish engulfing pattern is forming on a monthly chart.

Daily techs are in full bearish setup and contribute to negative outlook, as bears pressure immediate target at $72.45 (200MMA), violation of which would risk test of psychological $70 level.

Corrective actions are expected to be limited (unless substantial change in fundamentals) and offer better levels to re-enter firmly bearish market, while capped under $80 barrier (psychological/falling 10DMA).

Res: 76.43; 77.41; 78.48; 80.00.
Sup: 73.57; 72.45; 71.62; 70.00.

On Friday, the Canadian dollar was the best-performing currency among the 20 global currencies we track, while the Brazilian real showed the weakest results. The Chinese yuan was the leader among emerging markets, while the Japanese yen underperformed among majors.

In focus today

U.S. Dollar Index

The U.S. Dollar Index (DXY) slightly strengthened on Friday's low liquidity trading.

Possible effects for traders

The Friday session was calm following the U.S. Thanksgiving. This morning DXY reached 106.500 as investors turned to the safe-haven instrument on the back of anti-lockdown protests in China. Now, the market will focus on the Federal Reserve (Fed) Chairman Jerome Powell's speech on Wednesday that may support the greenback. It will come out a week after the FOMC Minutes showed the regulator's willingness to adopt a more dovish policy. Simon Harvey, a senior FX analyst at Monex Europe, commented that 'Powell's first comments since the 2 November meeting will be crucial. If he doesn't push back on the recent loosening in financial conditions, the dollar's near-term support may slip.'

XAUUSD

XAUUSD traded flat and closed at 1,756.06.

Possible effects for traders

The gold price slightly changed following the U.S. dollar movements on Friday. This morning, XAUUSD decreased to 1,746 as the firm greenback pushed the pair lower. Jerome Powell's speech on Wednesday and the anticipated NFP data on Friday will influence gold's price this week. XAUUSD will likely continue trading within the bearish sentiment. If it drops below 1,745, the pair can target the support at 1,736.

EURUSD

EURUSD fluctuated during the day but closed almost unchanged.

Possible effects for traders

The pair was turbulent as the European Central Bank (ECB) officials disagreed on the monetary policy outlook. Chief economist Philip Lane and board member Isabel Schnabel gave controversial opinions on whether the ECB should slow down its rate increases. The regulator will hold the next meeting in mid-December, and traders are discussing what are the ECB's next steps will be. EURUSD fluctuated from 1.03550 to 1.04300, and the pair will likely continue its sideways trading today.

Other events

XTIUSD

U.S. crude oil declined for the third consecutive week, closing below 77.00 on Friday.

Possible effects for traders

XTIUSD was primarily bullish, reaching the resistance at 80.00. However, news about record-high COVID-19 cases in China sent the market into a huge downwards move, and the pair broke below 77.35. Moreover, crude oil consumption reached a seven-month low in China, signalling the country's demand will not recover soon. At the same time, G7 countries cancelled the scheduled meeting on the Russian oil price cap, and XTIUSD found support at 76.70 by Friday night. The pair dropped slightly during the Asian session today and consolidated at 74.20 due to the weekend's huge anti-lockdown protests in China. Then the price rebounded but remained heavily oversold. Overall, traders will stay cautious ahead of the G7 meeting this week, which can resolve political tensions.

The Aussie Dollar failed to clear the 0.6800 resistance against the US Dollar. The AUD/USD pair started a downside correction below the 0.6780 and 0.6750 support levels.

There was a clear move below the 0.6720 level and the 50 hourly simple moving average. The pair even spiked below the 0.6700 and is currently consolidating losses. An immediate resistance on the upside is near the 0.6710 level and a connecting bearish trend line on the hourly chart.

If there is an upside break above the 0.6710 zone, the pair could rise steadily towards the 0.6750 level in the near term. The main resistance now sits near the 0.6800 level.

An immediate support is near 0.6670 on FXOpen. The next key support is near the 0.6650 level. A downside break below the 0.6650 support could lead the pair towards the 0.6600 support.

Daily Pivots: (S1) 167.66; (P) 168.23; (R1) 168.82; More...

Intraday bias in GBP/JPY remains neutral and outlook is unchanged. On the upside, break of 169.07 resistance will argue that larger up trend is ready to resume through 172.11 high. However, break of 166.08 minor support will turn bias back to the downside to extend the corrective pattern from 172.11 with another fall.

In the bigger picture, there is no clear sign of medium term topping yet. Up trend from 123.94 (2020 low) could still resume through 172.11 high at a later stage. However, firm break of 159.71 support will argue that it's already in correction to the up trend from 123.94, and deeper decline would be seen back towards 148.93 support.

Daily Pivots: (S1) 144.14; (P) 144.65; (R1) 145.17; More....

Intraday bias in EUR/JPY remains neutral first. Break of 142.52 support will extend the decline from 148.38, to 61.8% retracement of 133.38 to 148.38 at 139.11. On the upside, though, above 146.12 minor resistance will bring stronger rally back to retest 148.38 high instead.

In the bigger picture, there is no clear sign of medium term topping yet. Up trend from 114.42 (2020 low) could still resume through 148.38 to 149.76 (2014 high). However, break of 137.32 support argue that a medium term correction has already started to correct the whole up trend from 114.42.

Daily Pivots: (S1) 0.8579; (P) 0.8597; (R1) 0.8618; More...

Focus stays on 0.8570 support in EUR/GBP. Firm break there will resume the fall from 0.9267 and target 61.8% projection of 0.9267 to 0.8570 from 0.8827 at 0.8369. On the upside, above 0.8634 minor resistance will turn bias back to the upside for recovery. But outlook will stay bearish as long as 0.8827 resistance holds.

In the bigger picture, current development suggests that fall from 0.9267 is a down leg inside long term range pattern. Deeper fall could be seen towards 0.8201/8338 support zone. But strong support should be seen there to bring reversal. Nevertheless, firm break of 0.8827 resistance will turn favor to the case that such decline is merely a correction in the up trend from 0.8201. That is, further rally would be seen at a later stage through 0.9267.

Daily Pivots: (S1) 1.5368; (P) 1.5410; (R1) 1.5440; More...

EUR/AUD rises notably today but stays below 1.5551 resistance, intraday bias remains neutral first. On the upside firm break of 1.5551 will argue that larger up trend is ready to resume. Intraday bias will be back on the upside for 1.5740 resistance and above. In case of another fall, downside should be contained by 55 day EMA (now at 1.5298) to bring rebound.

In the bigger picture, a medium term bottom should be in place at 1.4281, on bullish convergence condition in daily MACD. Further rise would be seen back to 1.6434 key resistance next. Break of 1.4965 resistance turned support is needed to indicate reversal. Otherwise, further rally will remain in favor.

Daily Pivots: (S1) 0.9812; (P) 0.9835; (R1) 0.9855; More....

Range trading continues in EUR/CHF and intraday bias remains neutral at this point. On the upside, firm break of 0.9953 resistance will resume larger rally from 0.9407 to 1.0072 fibonacci level. However, break of 0.9720 will extend the decline from 0.9953 to 61.8% retracement of 0.8407 to 0.9953 at 0.9616.

In the bigger picture, rejection by 0.9970 support turned resistance retains medium term bearishness. That is, while 0.9407 is a medium term bottom, price actions from there would develope into a corrective pattern rather than a reversal. Down trend resumption through 0.9407 is mildly favored at a later stage. This will remain the favored case now, as long 38.2% retracement of 1.1149 to 0.9407 at 1.0072 holds.

The Dax 40 steadies over upbeat German Q3 GDP. The RSI’s overbought condition is a sign of overextension. As the index tests June’s high of 14700, short-term traders may look to trim their exposure. 14370 is the first support and its breach might give buyers an excuse to bail out. Then 14150 at the confluence of a recent daily low and the 20-day moving average would be a key level to prevent broader liquidation. On the upside, a break above the ceiling could lay the groundwork for a bullish reversal in the medium-term.

The euro softened after ECB officials played down wage pressure. Following a break above September’s high of 0.9830, the euro has found robust support over 0.9720. Then higher lows show rising interest in keeping the pair afloat. 0.9890 is a major resistance to clear before the rebound could break free. A rally above the recent peak of 0.9950 would put the single currency on a bullish trajectory in the weeks to come. On the downside, 0.9760 is the support to monitor in case hesitation leads to a prolonged sideways action.