The panic in the financial markets, which resulted from the collapse of the oil market, led to an unexpected turn – the decline of the dollar against all major currencies of the world. It is not strange, but this time, a sharp decline in oil prices also hit the United States, since it was the American oil companies specializing in the production of shale oil and gas that were threatened with bankruptcy. In other words, Russia's rather abrupt political initiative, in the form of a refusal of an agreement to reduce production volumes, poses a small threat to American companies. However, the volume of production from this in the United States can seriously sink, especially because American companies prefer to work at spot prices, and they are extremely dependent on price fluctuations while most oil-exporting countries operate on long-term contracts, in which prices and volumes are prescribed in advance. That is, the main oil exporters are currently safe, and problems for them will only begin if oil prices remain at a low level for a long time. At the same time, in many currencies, the dollar began to recover immediately immediately after the weakening. However, with regard to the single European currency, this process began only today.
The dollar will most likely continue to strengthen its position, because the single European currency is seriously overbought. In addition, the last wave of its growth was purely speculative and emotional in nature, whereas it has no fundamental reasons for growth. Moreover, today's GDP data for the fourth quarter should confirm once again the fact of a slowdown in the economic growth of the euro area, from 1.2% to 0.9%. That is, Europe continues to slide into recession. Well, oil prices are already starting to gradually recover.
GDP growth rate (Europe):
From the point of view of technical analysis, we see upward impulses against the background of a general panic, where after the recovery process came, returning the quote to the area of last Friday. In fact, the quote currently fluctuates on the level of the gap and tends to come closer to the main coordinates of 1.1300.
In terms of a general review of the trading chart, we see an attempt to change the medium-term trend, after fixing the price at 1.1440 / 1.1480. However, it is not worth making hasty conclusions due to the existing background and high speculative interest.
It is likely to assume that the existing recovery process will continue to form, where the level of 1.1300 will be the first point of support. The subsequent movement will depend on the points of price fixing, relative to the level of 1.1300, as well as how speculators will behave, since the external background is still strong.
From the point of view of a comprehensive indicator analysis, we see that minute and hour periods signal a sale, working on the recovery process. At the same time, daily periods reflect an inertial upward trend, giving a buy signal.
*Prezentowana analiza rynku ma charakter informacyjny i nie jest przewodnikiem po transakcji.
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