Oil rallies as hopes of supply cuts and Trump intervention rise

The price of crude oil rallied in overnight trading as momentum continued for the second day. The rally is partly because investors hope that Trump will intervene and help oil companies. It is also because the market hopes for natural supply cuts as more shale companies reduce their production. Further, there are hopes that geopolitical conflicts in the Middle East will be positive for oil prices. Still, there are questions about demand now that most people are staying at home, and planes are not flying.

Wall Street futures declined after Trump said that he may extend coronavirus social distancing guidelines until early summer. He said this at the White House, where he was doing his daily briefing. An extension of the guideline would be challenging for the US economy and its companies. Just yesterday, data from the government showed that an additional 4.4 million people had filed for unemployment benefits. The new housing and manufacturing PMI numbers also disappointed. The announcement came a few hours after the hopes of a coronavirus drug eased. In an announcement, the World Health Organisation said that Gilead’s drug, Remdesivir, was not effective in treating the disease.

We will receive the retail sales numbers from the UK today. Analysts expect the sales to have dropped by 4% in March, which will be the worst number in years. Also, we will likely hear some news about the Brexit talks that have been going on this week. We will also receive the manufacturing confidence data from Turkey and business confidence numbers from Germany. The Russian central bank will deliver its rates decision. Finally, we will get durable goods orders from the US.

EUR/GBP

The EUR/GBP pair was little changed ahead of the German business confidence and UK retail sales data. The pair is trading at 0.8715, which is slightly below the 38.2% Fibonacci retracement level. The price is also below the 14-day and 28-day EMA while the RSI has been falling. Most importantly, the pair has formed a bearish Doji candlestick pattern. This means that the price may continue declining.

EUR/USD

The EUR/USD pair declined in overnight trading as the market reacted to the disappointing data from the US. The pair fell to an intraday low of 1.0760, which is slightly above yesterday’s low of 1.0755. On the hourly chart, the price is below the short and medium-term moving averages, while the Average True Range (ATR) has risen. Today, the pair may react to potential Brexit news and the durable goods orders from the US.

USD/CHF

The USD/CHF pair rose sharply in overnight trading as investors reacted to the US jobless claims data. The pair is trading at 0.9768, which is above the short and medium-term moving averages. The RSI has remained slightly below the overbought level of 70 while the dots of the Parabolic SAR are below the price. The pair may continue rallying and possibly test the 0.9795 resistance level.