Greenback falls after the US releases weakest inflation data in 5 years
The price of crude oil dropped today as the market reacted to the new supply cuts by OPEC. Yesterday, the organization and its allies agreed to slash oil output by about 10 million barrels per day. The supply cuts will reduce to 8 million per day in June and remain that way until the end of the year. Market participants are afraid that the cuts won’t go far enough to support oil prices. There is also further concern that the deal could backfire after Mexico disagreed on its allocated quota. The country said that the country could only slash 100k barrels instead of the allotted 400k barrels.
The euro rose against the dollar after European members reached an agreement on coronavirus financing. The agreement was reached after northern countries like the Netherlands backed away from the previous demand for tough conditions for any bailout funding. The ministers also agreed to use the €500 billion European Stability Mechanism (ESM) to cushion the economies. However, the ministers disagreed on longer-term economic reconstruction for the region. The new agreement will see the also see the region set a new €100 billion unemployment insurance scheme.
The US dollar index declined after the government released consumer prices data for March. The numbers showed that headline consumer prices declined by a seasonally-adjusted rate of 0.4%. This is after they rose by 0.1% in the previous month. The prices rose by 1.5% on an annual basis. The core CPI, which excludes the volatile food and energy products, declined by 0.1% and 2.1% on a monthly and annual basis respectively. The headline inflation number is below the Fed’s target of 2.0%.
The EUR/USD pair rose to an intraday high of 1.0945. The volume was relatively low since most markets are closed today. On the hourly chart, the price is nearing the 50% Fibonacci Retracement level of 1.0960. The price is also above the 14-day and 28-day exponential moving averages while the RSI has flattened below the overbought level. The likely scenario is where the pair moves higher to 1.0960. The alternative scenario is where it retests the 38.2% and the 28-day EMA at 1.0912.
The XBR/USD pair declined to an intraday low of 32.44 on news that Mexico was resisting deeper supply cuts. On the 30-minute chart, the pair is trading slightly above the important support shown in green below. The 28-day and 14-day exponential moving averages have made a bearish crossover. The likely scenario is where the pair breaks the 32.44 support and heads lower to possibly 30.00.
The GBP/USD pair rose to an intraday high of 1.2481 after Boris Johnson left hospital. On the hourly chart, the pair is slightly above the important resistance level of 1.2470 and slightly above the 14-day and 28-day exponential moving averages. The pair has also formed an ascending triangle pattern that is nearing its tip. This means that the pair could make a significant breakout in either direction in the near term.