Demand in WTI crude stayed strong despite a surprise 8.42-million-barrel rise in US oil inventories last week according to the latest API report. The more official EIA data is due today and will certainly remain short of the median expectation of a 1.8-million-barrel fall. But news being already out, the marginal impact on oil prices should remain limited. On the other hand, the technical indicators point that the recent rally in oil is overstretched, and a pause or a minor downside correction, should be healthy at these levels. Support is seen near the 100-day moving average ($35 pb).
In the FX, the weak US dollar continues supporting the rise elsewhere.
The EURUSD rebounded a figure after having dipped to 1.1240 on Tuesday. The major catalyzer of the positive move being the US dollar slump, a further rise in EURUSD remains conditional to the US dollar appetite, or the lack thereof. The next positive target for the euro-bulls is 1.15, but the overbought market conditions warn that a further advance in EURUSD could lead to a sharper downside correction later.
Cable is making its way through the 200-day moving average (1.2730), offering a bright spot for investors looking for a pound-led downside move once the dollar is done falling. The fundamental outlook for sterling remains comfortably negative, as the pricing of the mounting no-deal Brexit odds are not fairly reflected in the actual pound valuation just yet.
By Ipek Ozkardeskaya
