Today, the oil market has opened with a fairly strong bearish gap, but by the opening of the European trading session, the situation has changed significantly.
Recall that on Thursday, Donald Trump announced that Saudi Arabia and Russia could reduce oil production by as much as 10 million barrels. There was also information about the OPEC+ meeting to discuss the introduction of quotas for oil production. All this provided additional support for oil, which last week pushed the price of WTI American crude oil above $30.0 per barrel.
All information coming out from Russia regarding the “oil deal” indicates a high probability of reaching an agreement. Nevertheless, the activity of buyers remains moderate near the $30 a barrel mark. Therefore, only further action from the United States and Saudi Arabia can return buyers to the market.
I’ll draw your attention to the USD/CAD currency pair, which has fallen by 180 points. At the same time, demand around the support level of 1.4100 remains strong, which limits the selling pressure. I’ll also draw your attention to the fact that on the way to 1.3990 there is a support level of 1.4060, which should provide additional support. Given all this, only another strong rise in oil prices can lead to a collapse of the pair to 1.3990.
Moving to the American session, the economic calendar is looking pretty empty. At the same time, trading activity should remain active amid clear uncertainty regarding short-term prospects, due to the spread of the COVID-19 virus.
Given the difficult economic situation in the eurozone and especially in Italy and Spain, compared with the United States, I expect a prolonged weakening of the EUR and, as a consequence, the EUR/USD currency pair. The immediate target for sellers is the 1.0770 mark, while there is a risk of a pair falling to 1.0720 and further to 1.0650. This scenario remains a priority until the quote returns above 1.0890.
The above review is not a direct guide to trading, and can only be classed as recommendations.