Forex Market Snapshot
WTI Crude Oil
Financial markets had another active day, and although the main driver is still Friday’s crucial dovish shift by Fed Chair Jerome Powell, the Dollar’s decline has been halted by a dismal German Industrial Production number, which gave yet another confirmation of the sharp global economic slowdown. The major currency pairs will have another important day tomorrow with the Fed’ meeting minutes being at the center of attention.
Besides that, the ongoing round in the US-Chinese trade talks will also likely end tomorrow, after being extended by one day, and we still think that both sides are eager to show progress in light of the recent turmoil in financial markets and the very weak Chinese economic numbers.
In the main other asset classes, the risk-on rally continued, with crude oil gaining ground for the 7th day in a row, and with US stocks extending their bounce again, hitting almost three-week highs thanks to the Fed’s capitulation, and the deeply oversold momentum readings that developed following the December rout.
EUR/JPY, 4-Hour Chart Analysis
While the Euro got hit by the very weak German economic release, the EUR/JPY pair, which has been one of the best risk measures lately, barely budged, continuing the post-flash-crash rebound and holding on its recent gains.
The oversold short-term readings are now cleared, but the counter-trend move will likely continue after the outsized decline, and the pair could breach the dominant trendline and test the resistance level near 125.80 in the coming week.