Oil and Gold Rebound, USD Weakness Lifts EUR/USD

US Dollar Market Update:

Commodity Overview – Gold & Oil bounce back from support

Over the past two years, the economic implications of the Covid-19 pandemic has forced central banks to implement quantitative easing measures in an effort to avoid a global recession.

As interest rates fell to near-zero, commodity supply constraints and soaring energy prices have resulted in elevated levels of inflation, reducing the purchasing power of consumers.

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While this remains a prominent theme for 2022, the invasion of Ukraine and sanctions against Russian products (including oil and gas) has bolstered demand for commodities, allowing crude oil prices to find support above the critical $100 p/b mark.

After getting slammed by potential developments in the Ukraine-Russia peace talks yesterday, WTI rebounded back to the 2014 high (107.65) with the next level of resistance holding at the key psychological level of $110.00. With the current conflict still unresolved, gold price action remains muted with the 23.6% Fibonacci level of the 2020 move providing support at $1,921.

Oil (WTI) Daily Chart

Chart prepared by Tammy Da Costa using TradingView

USD under pressure as focus shifts to economic data

As discussed by Justin McQueen earlier today, USD/CAD has fallen below prior support at 1.245 (YTD) low with bearish continuation bringing the 1.230 handle into play. With a weaker USD lifting both EUR/USD and GBP/USD, USD/JPY has shifted focus to US economic data which could drive price action in either direction.

Source: DailyFX economic calendar

S&P, Nasdaq and Dow pause at resistance

After an impressive rally in equities, S&P 500 ran into a wall of resistance at 4650 before falling back towards the 18 January high of 4632. With NADSAQ (US Tech 100) and DJI (Wall Street 30) following suit, the CCI (commodity channel index) remains in overbought territory (for all three indices) with divergence suggesting that bullish momentum may be losing steam.

Chart prepared by Tammy Da Costa using TradingView

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707