- US dollar index (USDIDX) bounces off the lower limit of the upward channel
- Turmoil on the Turkish lira market
- WTI (OIL.WTI) continues to climb higher
The previous week was an interesting one for the US dollar thanks to the dovish FOMC meeting. The US central bankers ruled out any rate hikes this year and announced the end of balance sheet trimming, what made the US currency less attractive in the investors’ eyes. However, weakness was short-lived and USD began to move higher as risk appetite faded following release of the European PMIs and the US 3m10y yield curve inverted. From a technical point of view, the US dollar index (USDIDX) is once again bouncing higher off the lower limit of the upward channel, a hurdle that limited downward price moves earlier on (red ellipses on the chart below). It should be noted that price managed to surpass last year’s peaks just minorly at the beginning of March. Such an outcome gives some hope to market bulls as it may hint at looming trend reversal. The lower limit of the channel and 200-session moving average serves as the nearest support levels and a break below could be a signal for a potential deeper pullback.
Some wild price swings were spotted at the end of the previous week on the Turkish lira market. Lower risk appetite, JPMorgan report and upcoming regional elections in Turkey can all be named as reasons behind recent drop in TRY valuation. This is not the first time when a negative data mix caused carry traders (investors who seek to benefit from interest rate differential) to rapidly sell their TRY holdings. However, just as it was in the previous cases, a drop was recouped as quickly as it was made. USDTRY failed to break above the 38.2% Fibo level of last year’s retreat from ATH. A break above this level would pave the way towards 2018’s highs but no such thing happened and 5.1-5.9 range trading may be now on the cards.
Bulls regained ground on the oil market as well. However, WTI (OIL.WTI) failed to break above the upper limit of the ascending wedge pattern and the 50% Fibo level of last year’s downward price impulse. It should be noted that recent decline was rather insignificant and oil keeps trading within an uptrend. Bulls are trying to break above the aforementioned level at press time. In case it is breached the next resistance level in line can be found in the vicinity of 61.8% Fibo level ($62). Lower limit of the wedge pattern continues to serve as the nearest support level.