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The market mood is upbeat amid optimism about upcoming US stimulus and upbeat vaccine developments, most evident in oil’s ascent above $60. Bitcoin has retreated from near $50K while US and Chinese holidays cause thinner volume.
US Stimulus: The US Senate acquitted former President Donald Trump in his impeachment trial after failing to reach a two-thirds majority. The end of the proceedings clears the way for driving through a larger coronavirus relied on the package. President Joe Biden is working with moderate Democrats on a bill worth up to $1.9 trillion.
WTI Crude Oil has topped $60, joining Brent in surpassing this round number. Hopes for a rapid global recovery and output cuts enacted earlier in the year are pushing the black gold higher.
UK: Britain hit the milestone of jabbing 15 million people by February 15, reaching priority groups in most places. Prime Minister Boris Johnson is under growing pressure to ease restrictions ahead of his February 22 speech on the topic. GBP/USD reached a new 34-month high of 1.39.
Japan’s economy grew by 3% in the fourth quarter of 2020, beating expectations and placing the world’s third-largest economy on a better footing. It is unclear if the Olympic Games will go ahead in Tokyo in July. USD/JPY is hovering around 105.
New Zealand placed Auckland in a three-day lockdown and the rest of the country under restrictions after a family of three tested positive for covid. NZD/USD is shrugging off the news and edging higher.
US stocks markets are closed on Monday for Presidents’ Day, while China and several other Asian countries extend their New Year holidays.
“Given the lacklustre state of current oil demand and risks to vaccination programmes, we think that there is a high risk that oil prices could drop back in the near-term. That said, in light of the recent price performance and the story we are telling, our forecast of $60 per barrel by year-end now looks conservative and we are raising it to $70.”
“We are upbeat on the outlook for demand this year, premised on the view that mass vaccination will enable the opening up of the hospitality and travel sectors in many advanced economies. In particular, we expect a release of pent-up demand in the second half of the year. What’s more, we suspect that oil use will still pick up strongly even if international travel restrictions remain in place, as higher levels of domestic travel offset some of the weakness in jet fuel demand.”
WTI finally surpasses the $60.00 mark
The barrel of WTI trades above the key $60.00 mark for the first time in over a year at the beginning of the week. Friday’s uptick amidst rising open interest and volume allows for the continuation of the rally in the very near-term, although the extreme overbought condition (as per the daily RSI) might prompt a correction.
GBP/USD managed to get above the resistance at 1.3875 and is trying to settle above the next resistance level at 1.3900.
GBP/USD managed to settle above the resistance at 1.3875 and is trying to settle above the next resistance level at 1.3900. RSI has just entered into the overbought territory but there is still plenty of room to gain additional momentum in case the right catalysts emerge.
If GBP/USD settles above the resistance at 1.3900, it will head towards the next resistance level which is located at 1.3915. A move above 1.3915 will push GBP/USD towards the resistance at 1.3935. It should be noted that GBP/USD has not visited this territory for several years, and it remains to be seen whether previous levels will be relevant for today’s trading.
On the support side, the previous resistance at 1.3875 will serve as the first support level for GBP/USD. In case GBP/USD declines below this level, it will head towards the next support at 1.3835. A move below this support level will open the way to the test of the support at 1.3800.
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