STERLING RETREATS AS UK INFLATION SOARS TO THREE-DECADE HIGH

The price of crude oil rose sharply on Wednesday after Russia warned of a potential collapse of the energy market. In a statement, the country’s deputy prime minister said that a complete embargo of the country’s oil and gas will have significant challenges for the world energy market. Russia is one of the biggest oil producers in the world, accounting for about a fifth of total consumption. At the same time, the country slowed its exports as maintenance works continued on one of its top pipelines. The government expects that the maintenance work will see supplies fall by 1 million barrels. The Energy Information Administration (EIA) will publish the latest inventories data today.

The British pound retreated even after the UK published strong consumer inflation data. According to the Office of National Statistics (ONS), the country’s headline CPI rose from 5.5% in January to 6.2% in February. That number was much higher than the median estimate of 5.9%. On a month-on-month basis, the CPI rose from -0.1% to 0.8%. Excluding the volatile food and energy prices, the CPI rose from 4.4% to 5.2%. These numbers came a few days after the Bank of England (BOE) decided to hike interest rates by 0.25%.

The South African rand continued its bullish momentum against the US dollar even after the country’s inflation disappointed. According to the statistics agency, the headline consumer inflation remained unchanged at 5.7% in February. The figure was lower than the median estimate of 5.8%. Excluding the volatile food and energy products, the country’s inflation also remained unchanged at 3.5%. These numbers came a day ahead of the upcoming decision by the South African central bank.

USDZAR

The USDZAR pair has been in a bearish trend in the past few weeks as the South African rand strength continued. On the four-hour chart, the pair moved below the key support level at 14.91, which was the lowest level in February this year. It has moved below the short and long-term moving averages while the Relative Strength Index is moving sideways. Therefore, the pair will likely continue falling ahead of the SARB decision.

GBPUSD

The GBPUSD pair initially gained ahead of the inflation data. It then erased most of those gains and is trading at 1.3184. On the four-hour chart, it is approaching the 23.6% Fibonacci retracement level. Also, it has moved to the 25-day moving average while oscillators are pointing downwards. Therefore, the pair will likely keep falling as bears target the support at 1.3100.

EURUSD

The EURUSD pair declined to an intraday low of 1.0985 ahead of a statement by Jerome Powell. On the four-hour chart, the pair moved slightly below the ascending trendline shown in yellow. It also declined below the 25-day and 50-day moving average and is now approaching the 23.6% Fibonacci retracement level. The RSI is also pointing downwards. Therefore, the pair will likely keep falling during the American session.