Forexlive Americas FX news wrap: Oil prices plummet on Shanghai lockdown/end of war hope

The price of crude oil is trading down over $10 on the day on the back of a rolling shutdown from Covid in Shanghai and later on news from the FT that there are hopes for a ceasefire in Ukraine.

The price is trading at $103.40 as I type (lower than the futures settlement price of $105.96), down about -$10.50 on the day or -9.26%. The price is below the 50% midpoint of the move up from the March 16 low at $105.05, but is still a ways away from that March low at $93.54.

As the month moves toward a close, the price of crude oil had a volatile month. The contract starting at $95.91, reached a high of $130.50 on March 7, and then fell to the month low at $93.54 on March 15, before rotating back up to $116.55 last Thursday. The low today reached $102.83.

Gold also took it on the chin today with a decline of -$36.47 currently or -1.86% at $1921.28. The low today reached $1917.14. That was still above the low from last Monday at $1910.32 and the low from the month at $1894.70 from March 16, but is also well off the month high (and all time high) at $2070.42. The high price since the low for the month on March 16 reached $1966.12.

Sticking to commodities, the price of wheat futures today is trading right around the 50% midpoint of the move up from the February low to the peak high in March. Recall in March there was a string of 6 straight days when the price of wheat traded up-limit. That took the price up to $13.63. The price has since moved to a corrective low at $10.35. The current price is at $10.57 (50% is $10.51).

The combination of those moves is giving hope to the ceasefire argument.

The stock market today also got a boost from ceasefire hopes. The S&P index is closing above it’s 100 day MA for only the 3rd time since January 18th. The other 2 closes above that MA, reversed the next day. You can be assured, traders will be watching the MA tomorrow, and if the break higher today fails again, it could lead downside momentum again.

S&P closed above the 100 day MA

In the forex today, the EUR and the USD are fighting it out for the strongest of the majors. The JPY is the weakest. The JPY was the runaway weakest of the majors at the start of the session (and was even weaker in the London morning session), but recovered some of the declines in North American session.


The strongest to weakest of the major currencies

Some technical levels in play for the major currency pairs:

  • EURUSD: The EURUSD created a floor at 1.09438 with three separate hourly lows in the Asian, London and NY sessions. The highs for the day in the pair stopped three separate hourly bars against the 100 hour MA (currently at 1.0996). A move back above the 100 hour MA would tilt the bias more in favor of the buyers with the 200 hour MA at 1.10183. Stay below and get below 1.0971 (50% midpoint of range since March 7) would increase the bearish bias.
  • GBPUSD: The GBPUSD fell below the low from last week at 1.3118 and extended below a swing area between 1.3078 to 1.30878 on further selling. The price is at 1.3094 near the close. Move below 1.3078 again would increase the bearish bias. Move above 1.3118 and the seller will likely lose some confidence.
  • USDJPY: The USDJPY fell below the 50% midpoint of the extended range today at 123.54 (the range today for the USDJPY was huge at 310 pips vs a 22 day average of 93 pips). The low reached 123.135, but did recover into the close up to 123.876 and back above the midpoint level. Despite the volatile correction, the pair is still up 14 of 16 days including today’s gain. If the sellers were to stay below the 50%, the story would be different. It did not. So the buyers are still in control.
  • USDCAD: The USDCAD raced above its 100 hour MA at 1.25406 for the first time since March 15, and briefly traded above it’s higher 200 hour MA as well (at 1.2589 with the high price reaching 1.25919), but the momentum faded, and the price is closing below its 100 hour MA at 1.25406. That MA will be the barometer for the buyers and sellers in the new trading day. Move above is more bullish. Stay below and the sellers are still in control.

Pres. Biden released his budget which included a corporate tax rate going to 28% (Trump took it to 21%), a minimum tax rate for the wealthiest of 20%, and a tax on unrealized gains of businesses (how private businesses would be valued would certainly be a nightmare).

Regarding the budget, the Pres. makes his suggestions. The Congress takes it and chops it up. I can’t see what the Pres. proposed getting through Congress (which is not all that surprising).

Good fortune with your trading.

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