Today's trading summary: Oil continues to stagnate and calm in the yellow metal's trading
Oil prices continued their decline at the beginning of the week's trading, amid expectations of an increase in supply, even though the rise in energy costs and the rise in the number of infections with the Coronavirus may burden global demand. This decline came in the wake of the United Nations agreement on Saturday that fossil fuels are the main driver of global warming.
Over the past three weeks, oil markets have suffered, affected by the US dollar strength amid expectations that the US administration will release quantities of strategic reserves to calm prices.
West Texas crude fell to its lowest level since last November and is trading around the levels of $78.60 a barrel, and trading below the levels of $77.50 will pave the way for oil to target the levels of $75/70 in the medium term.
Speaking of gold, the technical level of $1868 was a strong barrier capping the bullion's upside in last week's trading. And despite touching the $1870 mark, the precious metal did not last long there, following the better than expected data on the manufacturing index in New York state.
Gold is currently hovering around the levels of $1860, teasing the bullish trend line on the 1-hour time frame. If prices were able to break this trend line, the yellow metal might witness a continuation to the current corrective move where sellers will aim to the levels of $1845-1850. Nonetheless, the bullish bias could continue to dominate sentiment as long as prices do not decline to the areas of 1835 dollars.
As for Wall Street, stocks witnessed a decline at the beginning of the week's trading due to fears of rising inflation and weak consumer confidence. Most investors are seeking growth stocks, especially technology stocks.
The Dow Jones index is trading slightly below the 50% Fibonacci retracement levels on the 4-hour time frame, around the 36,242 points, below the descending price channel's descending trend line, and most likely, staying below these levels might push it to visit the 35000 points levels.
In the FX arena, the EURUSD is still facing selling pressures and continued as the US dollar still dominates the EUR. The catalyst behind the drop is Christine Lagarde, ECB President's statement that tightening monetary policy now to curb inflation may stifle the euro area's recovery. Her comments came in response to calls and market expectations regarding the European Central raising interest rates.
Speaking to EU lawmakers, Lagarde acknowledged that the rise in inflation will be higher and longer than previously expected, but she emphasized that it will fade over the next year.
The euro against the dollar is trading at its lowest level since July of 2020 at 1.1436, near strong support areas around the 1.1420 levels, which may provide some support for prices towards the 1.1520 levels.