USD falls as central bankers warn of Fed independence
The USD index declined in the Asian session as the tension between Donald Trump and the Federal Reserve continued. Over the weekend, the President said that the Fed’s decision to raise interest rates had helped reduce the momentum in the US stock market. The Fed has raised interest rates eight times, a move that the President has called unacceptable. His combative style with the Fed was criticize by a group of former Federal Reserve officials and foreign central bankers who met in Washington for IMF meetings. They said that his actions could weaken the confidence the world has on the USD.
The price of crude oil remained near YTD high as traders continued to focus on the supply cuts from OPEC. Last week, a report showed that most of its members had continued to cut production in line with what was discussed in the previous meeting. Saudi Arabia had cut almost 1 million barrels per day while the involuntary cuts from Iran and Venezuela had contributed to the tightening. On Friday, data from Baker Hughes showed that the number of rigs increased from 831 to 833. However, the US oil sector continues to face the challenge of transportation, with key pipelines still in construction.
With no major economic data expected today, traders will focus on the earnings from the United States. Today, key banks like Citigroup, Goldman Sachs, and M&T Bank will release their earnings. This is after the impressive results released by JP Morgan, Wells Fargo, and PNC Financial on Friday. Other important earnings that investors will focus on are Charles Schwab, Washington Federal, and PacWest Bancorp. These earnings could help determine the trajectory of the US stock market this week.
The EUR/USD pair rose to a high of 1.1315. On the four-hour chart, the price has been rising since April 2, when it was trading at the 1.1182 level. The current price is slightly below the important resistance level of 1.1330. This price is below the 25-day and 50-day moving averages while the RSI remains slightly below the overbought level of 70. The momentum indicator is also moving higher. There is a likelihood that the price could continue moving higher today.
The XTI/USD pair was little moved today as traders continued to think about supply. The pair is now trading at 63.70. On the hourly chart, this price is slightly below the YTD high of 64.60. It is also slightly below the 25-day and 50-day moving averages and slightly above the lower line of the Bollinger Bands. The RSI has moved slightly higher to the current level of 43. The pair will likely continue the upward trend to test the previous high.
The consolidation in the GBP/USD pair continued in overnight trading, with the pair now trading at the 1.3092 level. This level is along the 25-day and 50-day moving averages. The pair’s symmetrical triangle pattern is closer to reaching its apex. The price is also along the 50% Fibonacci Retracement level. This is an indication that the pair could have a major breakout this week depending on the progress made in the Brexit talks.