Pound Sterling Slips from Three-Year High as Fed, Tariffs, and Growth Jitters Set the Stage for Volatility

Economic

Summary:

The British Pound retreats from its three-year peak against the US Dollar as investors turn cautious ahead of key US economic releases, including Q1 GDP.

SELL GBPUSD

Close Time

CLOSED

1.33700

Entry Price

1.33200

1.34150

1.33392 +0.00080 +0.06%

6.5

Pips

Profit

1.33200

1.33635

Exit Price

1.33700

Entry Price

1.34150

The British Pound lost momentum against the US Dollar on Wednesday, edging back to 1.3355 during the European trading session after notching a fresh three-year high at 1.3445 just a day earlier. The GBP/USD pair, once fueled by robust UK rate expectations and a softening US macro narrative, now finds itself in the throes of market repositioning, as traders weigh both geopolitical headwinds and monetary policy uncertainty on both sides of the Atlantic.

Much of the intraday pullback is driven by a modest recovery in the US Dollar ahead of a packed North American data calendar, headlined by the preliminary reading of first-quarter Gross Domestic Product. According to the US Bureau of Economic Analysis (BEA), growth is projected to have sharply decelerated to an annualized pace of 0.4%, well below the previous 2.4% print and reflective of early-stage economic softness attributed to trade disruptions and policy volatility out of Washington.

The marked slowdown is not a complete surprise. Earlier this month, President Donald Trump stunned markets with another round of sweeping tariffs targeting major trade partners. The rationale was clear: protect American industry, curb deficits, and leverage negotiation power. However, the broader implications are proving more destabilizing than stimulatory. Businesses have been reluctant to expand capacity or investment amid an atmosphere of “tweet-driven” policy unpredictability, stifling any potential for near-term economic momentum.

At the same time, a string of complementary US data releases including the Q1 Employment Cost Index, ADP employment figures for April, and the Fed’s preferred inflation gauge, the Core PCE Price Index will provide further clarity on the health of the labor market and inflationary dynamics. Expectations point to steady wage growth at 0.9% in Q1, while private-sector job creation is seen dropping to 108,000 in April, down from 155,000 in March. Perhaps most critical is the core PCE figure, which is projected to rise just 2.6% in March, a slowdown from the 2.8% prior reading.

Such data could tip the scales toward a more accommodative Federal Reserve. While markets are near-unanimous in pricing no change for the Fed’s May meeting keeping the target range at 4.25%-4.50% futures now reflect a growing 65% probability of a rate cut in June, according to CME’s FedWatch Tool. That shift reflects a broader reassessment of the Fed’s inflation target trajectory and the economic drag induced by fiscal and trade policy clashes.

Despite this dovish tilt, Fed Chair Jerome Powell remains under persistent political pressure. During an event marking his 100th day in office, President Trump offered yet another thinly veiled critique of the Fed’s rate policy. While avoiding naming Powell directly, Trump’s remarks were unmistakable: “You’re not supposed to criticize the Fed... but I know much more than he does about interest rates, believe me.” Such statements underscore the ongoing tension between White House objectives and the Fed’s independent mandate, a friction that adds to the general climate of uncertainty.

In the UK, the Bank of England faces its own credibility test. The British Pound, though still elevated by recent standards, has come under pressure as traders increasingly price in a potential rate cut by the BoE in its May 8 policy meeting. Market sentiment shifted notably after BoE policymaker Megan Greene warned that the US-led trade war could have net disinflationary effects on the UK economy. Speaking at the Atlantic Council, Greene raised alarms about looming job market stress, exacerbated by an increase in employer contributions to national insurance up to 15% from 13.8% as of this month.

Her comments echoed concerns expressed by BoE Governor Andrew Bailey last week at the International Monetary Fund’s Spring Meetings. Bailey emphasized the risks posed by external trade shocks and signaled a need for policy flexibility, telling reporters, “We do have to take very seriously the risk to growth.” That sentiment has further emboldened market bets on a 25-basis-point BoE rate cut, especially in the absence of meaningful UK economic data this week.

Indeed, with the UK calendar offering little in terms of fundamental support, Sterling is largely at the mercy of external forces. Chief among them is the ongoing US-China trade confrontation. The Trump administration has challenged Beijing to return to the negotiating table, citing China’s disproportionate trade surplus. “I believe that it’s up to China to de-escalate, because they sell five times more to us than we sell to them,” said top White House advisor Bessent in an interview with CNBC. Beijing, however, remains defiant, vowing to defend its “interests and dignity.”

Technical Analysis

From a structural perspective, GBP/USD has broken decisively below the prior range support near 1.3380, marking a potential bearish shift. The pair had repeatedly failed to sustain above the Point of Control (POC) at 1.3415, a zone of high-volume resistance now acting as a technical ceiling. With price now descending into a low-volume node, momentum could accelerate toward the next key support area at 1.3319.

This setup suggests the market is rejecting the higher value area, breaking into thinner liquidity, and potentially establishing a new bearish leg. A close below 1.3380 acts as confirmation for further downside, with stops ideally positioned above 1.3415 to manage risk. As always, volume and price behavior near the 1.3320 level will offer clues on whether bears can maintain control or if the market will find reason to reverse.

TRADE RECOMMENDATION

SELL GBPUSD

ENTRY PRICE: 1.3370

STOP LOSS: 1.3415

TAKE PROFIT: 1.3320

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Summary:

Gold (XAU/USD) fell over 1% Tuesday as investors responded to President Trump’s executive order to ease auto tariffs.

SELL XAUUSD

Close Time

CLOSED

3265.00

Entry Price

3200.00

3320.00

4216.03 +18.12 +0.43%

410.3

Pips

Profit

3200.00

3223.97

Exit Price

3265.00

Entry Price

3320.00

Gold prices fell sharply on Tuesday, extending their losses for a second consecutive session as a combination of reduced trade tensions and profit-taking weighed heavily on the safe-haven asset. Spot gold (XAU/USD) declined over 1% in early European trade, slipping toward the $3,275 mark, as the market digested US President Donald Trump's executive order to ease tariffs on car parts—an unexpected gesture that signaled progress in US trade policy and removed one layer of uncertainty from global markets.

The news was first reported by Bloomberg, citing Trump’s intent to support US auto manufacturers while also fostering more amicable trade terms with key global partners. Although short on immediate economic impact, the move rekindled investor optimism that the White House is shifting towards a more cooperative trade stance. For bullion, this spelled downside pressure, as safe-haven flows began to unwind.

The timing of this policy change is crucial. Markets are bracing for a high-impact data release: the preliminary Q1 US Gross Domestic Product (GDP) figures, set to be released at 12:30 GMT. Economists anticipate a modest annualized growth of just 0.4% a dramatic slowdown from the 2.4% expansion recorded in the fourth quarter of 2024. With the Federal Reserve’s May 7 policy meeting looming, any major deviation from these expectations could recalibrate interest rate forecasts and in turn, influence gold's direction.

Alongside GDP, March’s Personal Consumption Expenditures (PCE) inflation data the Fed’s preferred inflation gauge is also due. Core PCE is expected to cool to 0.1% from February’s 0.4%, while headline PCE is forecast to drop to 0%. A lower-than-expected print could validate the Fed's current dovish stance and possibly intensify rate-cut speculation, supporting gold. However, if inflation proves stickier than anticipated, gold could face additional selling pressure as interest rate expectations shift higher.

Adding to the drama, President Trump again lashed out at Fed Chair Jerome Powell, claiming he "knows more about interest rates" than the central banker himself, as reported by Bloomberg. The political friction may increase pressure on the Fed and inject further volatility into an already fragile gold market.

From a broader perspective, gold’s rally earlier this year was largely fueled by global risk aversion. According to the World Gold Council, investors poured 227 metric tons of gold into ETFs in Q1 marking the highest inflow since 2022. That surge, coupled with persistent geopolitical risks, pushed prices to all-time highs.

However, the tide may be turning. Indian gold jewelry demand a key pillar of physical gold consumption declined in March and is expected to drop by up to 11% for the fiscal year ending March 2026, according to Bloomberg. Weak physical demand in Asia, combined with receding investor anxiety, could create the conditions for a deeper correction.

Technical Analysis

On the charts, gold (XAU/USD) is trading within a narrowing descending triangle formation typically a bearish continuation pattern. Price has formed consistent lower highs, bounded by a trendline that continues to push the asset lower. The horizontal support zone between $3,265 and $3,270 is now acting as a critical line in the sand.

A decisive break and close below this region particularly if accompanied by elevated volume could trigger a sell-off toward the next support around $3,245, and potentially as low as $3,200 in extension. On the other hand, if the support holds and upcoming data reignites rate cut bets, a sharp reversal cannot be ruled out.

For now, the RSI has backed away from overbought territory, and the MACD is hinting at bearish crossover momentum. Unless the $3,270 support area holds firm, the path of least resistance appears to be to the downside.

TRADE RECOMMENDATION

SELL GOLD

ENTRY PRICE: 2265

STOP LOSS: 3320

TAKE PROFIT: 3200

Risk Warnings and Disclaimers

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Manuel

Economic

Central Bank

Summary:

EURAUD has found solid support near the 1.7700 level, where several attempts to break lower have been rejected, suggesting this zone could serve as a launchpad for a new bullish leg.

BUY EURAUD

Close Time

CLOSED

1.77800

Entry Price

1.84200

1.75000

1.75485 +0.00218 +0.12%

280.0

Pips

Loss

1.75000

1.74958

Exit Price

1.77800

Entry Price

1.84200

The Australian Bureau of Statistics (ABS) is set to release two key inflation indicators: the quarterly Consumer Price Index (CPI) for Q1 2025, and the monthly CPI for March, which tracks annual price pressures over the past 12 months. The quarterly report includes the RBA’s preferred inflation measure, the trimmed mean CPI, closely monitored by policymakers.

Earlier this month, the Reserve Bank of Australia (RBA) held its Official Cash Rate (OCR) steady at 4.10%, following a 25 basis point rate cut in February—the first since the tightening cycle began in 2022.

Markets anticipate that the ABS will report a 2.3% year-on-year increase in March’s monthly CPI, slightly lower than the 2.4% recorded in February. Meanwhile, the quarterly CPI is projected to rise by 0.8% QoQ and 2.2% YoY in Q1 2025. The RBA’s trimmed mean CPI is forecast to climb by 2.9% YoY—easing from the 3.2% growth seen in the previous quarter—and by 0.7% QoQ, which would mark a modest acceleration from the 0.5% increase in Q4.

Despite some persistent inflationary pressures, these figures remain within the RBA’s target range of 2% to 3%, reinforcing the possibility of further rate cuts in the near term should economic momentum continue to moderate.

On the growth side, Australia’s economy showed signs of resilience, with GDP expanding by 0.6% in the final quarter of 2025. This outpaced market expectations of 0.5% and marked the strongest quarterly performance since December 2022. The annual growth rate reached 1.3%, exceeding the consensus forecast of 1.2%. While this helped to ease recession fears, underlying vulnerabilities suggest that the path ahead remains uncertain.

In Europe, ECB policymakers are increasingly signaling the need for additional monetary easing. On Monday, Finnish central bank governor and ECB policymaker Olli Rehn expressed concerns about inflation in the eurozone remaining below the central bank’s 2% target amid escalating trade tensions linked to Trump-era tariffs. Rehn emphasized the importance of keeping an open mind about future policy actions, even suggesting that rate cuts below the neutral level should not be ruled out.

Separately, François Villeroy de Galhau, Governor of the Bank of France and ECB member, reiterated the need for more interest rate reductions, citing confidence that inflation will return to target and warning about the risks that protectionist trade policies pose to the euro area’s economic outlook.

Market participants will be closely watching the upcoming preliminary GDP figures for the eurozone, along with the April Harmonized Index of Consumer Prices (HICP), scheduled for release on Wednesday and Friday, respectively. These reports could provide fresh insights into the ECB's next moves. Potential Rebound in EUR/AUD as Downside Momentum Fades_1

Potential Rebound in EUR/AUD as Downside Momentum Fades_1

Technical Analysis

EUR/AUD has found solid support near the 1.7700 level, where several attempts to break lower have been rejected, suggesting this zone could serve as a launchpad for a new bullish leg. Notably, the Relative Strength Index (RSI) dropped to 32 at the recent local low, placing it near oversold territory. While price has remained in consolidation, the RSI has continued to trend lower—an early sign that bearish momentum may be fading, potentially inviting buying interest from this area.

On the four-hour chart, the 100- and 200-period moving averages are positioned at 1.7930 and 1.7603, respectively. The 200-period moving average is now converging with the support zone, and a sustained move above it could be critical for validating a bullish breakout. However, if sellers manage to push price decisively below the 200-period MA, the next key support lies at 1.7366—a level that could attract renewed downside momentum.

Trading Recommendations

Trading direction: Buy

Entry price: 1.7780

Target price: 1.8420

Stop loss: 1.7500

Validity: May 08, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Economic

Stocks

Summary:

Following a robust performance last week, the U.S. stock market exhibited a lack of directional conviction during Monday's trading session. Major indices fluctuated near the flatline throughout the day. By the close of trading on Monday, the Dow Jones Industrial Average was seen oscillating around the 40,000-point level, reflecting the market's complex sentiment regarding macroeconomic data, Federal Reserve policy, and trade tensions.

SELL US30

Close Time

CLOSED

40650.00

Entry Price

37213.00

42273.00

48022.44 +22.54 +0.05%

16230.0

Pips

Loss

37213.00

42273.97

Exit Price

40650.00

Entry Price

42273.00

Fundamentals

At the close of trading on Monday, major U.S. stock indices exhibited mixed performance. The Nasdaq Composite declined by 36.81 points, representing a 0.2% decrease, to close at 17,346. The S&P 500 edged up by 1.47 points, a marginal increase of less than one-tenth of a percent, reaching 5,526. The Dow Jones Industrial Average rose by 133.49 points, or 0.3%, to finish at 40,246.

Overall trading activity on Wall Street was characterized by volatility, as investors appeared hesitant to make significant moves, anticipating key earnings releases and crucial economic data scheduled for publication in the coming days.

Four of the "Magnificent Seven" tech giants—Amazon, Apple, Meta Platforms, and Microsoft—are slated to report their quarterly earnings this week.

Later this week, the monthly employment report from the U.S. Department of Labor and the Federal Reserve's preferred measure of consumer price inflation are also expected to be closely scrutinized.

Investors are closely monitoring developments in trade, with Treasury Secretary Besant stating on ABC News' "This Week" that he believes the government is close to inking agreements on "17 or 18 significant trade deals" in principle.

Bessent noted, "While finalizing trade agreements may take months, agreement in principle, coupled with the good faith and adherence to parameters by our trading partners, can prevent tariffs from reverting to their highest levels."

MARKET WATCH: The recent rebound in U.S. stocks has prompted institutional investors to tactically adopt a bullish stance on the U.S. market. Positive catalysts, including earnings from major tech companies and announcements regarding trade agreements, are expected to continue bolstering the market following the recent downturn.

However, this rebound momentum may wane within weeks, as the adverse effects of U.S. tariffs begin to weigh on the economy in the coming months.

Overall, there remains considerable room for a de-escalation trade in the context of trade tensions. This brief rebound does not signify that all market risks have been eliminated.

Tactical Buying Momentum Quickly Dissipated_1

Technical Analysis

In the 1D timeframe, it indicates that the Dow Jones Industrial Average has found secondary support near the 37,852 level, which, if sustained, would reinforce a bullish outlook.

Key resistance levels are concentrated at 40,500, 40,700, and 41,000. A breach of the latter could facilitate a further advance towards the 50-day SMA at 42,273 and the 200-day SMA at 43,300.

The Relative Strength Index is hovering above the neutral zone, with no immediate overbought signals. However, a sustained break above 50 would likely confirm the next phase of upward momentum. Despite these technical indicators, fundamental headwinds are anticipated to reverse the current positive sentiment in the near term.

Trading Recommendations

Trading Direction: Sell

Entry Price: 40650

Target Price: 37213

Stop Loss: 42273

Valid Until: May 14, 2025 23:55:00

Support: 39600, 38913, 37852

Resistance: 40941, 41494, 42273

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Economic

Summary:

During the European trading session, gold prices continue to experience downward pressure, yet they remain above $3,300 amid mixed fundamentals. Market consensus suggests an expectation of increased volatility in the gold market moving forward.

SELL XAUUSD

Close Time

CLOSED

3336.00

Entry Price

3167.00

3385.00

4216.03 +18.12 +0.43%

490.0

Pips

Loss

3167.00

3385.00

Exit Price

3336.00

Entry Price

3385.00

Fundamentals

The gold price reversed its downward trajectory on Monday, driven by a resurgence of buying activity, which suggests that the downside risk for gold is significantly constrained. Investors, particularly proprietary traders and macro funds, were notably under-allocated during the previous rally in gold prices; therefore, the selling pressure has been limited, a factor reflected in the price increase.

Analyzing the recent gold market dynamics, a divergence is evident in fund managers' positioning, reflecting the complexity of gold's pricing logic. This divergence is characterized by the retreat from "short-term risks" versus the steadfast commitment to "long-term narratives."

Meanwhile, a market consensus is emerging. With the anticipated implementation of tariffs, the risk premium associated with gold may experience a short-term decline. Furthermore, the profit-taking activities of investors who previously purchased gold stocks and gold funds at elevated prices are expected to introduce volatility into the market, potentially intensifying fluctuations in gold prices.

The fluctuations stem from several key factors. First, the Federal Reserve's monetary policy. Last year, the market largely anticipated the Fed's shift from interest rate hikes to a rate-cutting cycle. However, the pace of rate cuts this year may be subject to considerable divergence in market expectations.

Second, the trajectory of the global economy. This year, the economic and inflationary uncertainties could be amplified by Trump's various reform policies.

Third, geopolitical issues remain a concern. While there was little easing of geopolitical tensions last year, the potential for renewed instability this year introduces further uncertainty. These three factors are likely to intensify the volatility in gold prices.

Buy Low and Sell High amid Fluctuations_1

Technical Analysis

In the 4H timeframe, gold is currently establishing the fifth structure within the initial downward trend, targeting the US$3,260 level. A breach below this threshold appears poised to facilitate further downside movement.

Furthermore, a broad oscillation could prompt a retracement towards the US$3,365 level. Upon the completion of this retracement, a subsequent decline may commence, with a target of US$3,260. From a momentum perspective, the MACD indicator corroborates this trajectory, with its signal line positioned below the 0-axis and exhibiting no signs of a reversal.

On the downside, the vicinity of US$3,286 offers a buffer. A further decline would test the critical support at US$3,260. Ultimately, US$3,236 may potentially impede further decline towards the US$3,167 level in the short term.

Trading Recommendations

Trading Direction: Sell

Entry Price: 3336

Target Price: 3167

Stop Loss: 3385

Valid Until: May 14, 2025 23:55:00

Support: 3286, 3260, 3246

Resistance: 3340, 3371, 3385

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

EUR/JPY rebounds above 162.40 as risk appetite returns amid easing US-China trade tensions and dovish ECB commentary, while the Bank of Japan holds a cautious stance ahead of its policy decision.

BUY EURJPY

Close Time

CLOSED

162.400

Entry Price

164.900

161.000

180.970 +0.097 +0.05%

109.2

Pips

Profit

161.000

163.492

Exit Price

162.400

Entry Price

164.900

The EUR/JPY currency cross climbed on Tuesday, recovering from over 0.50% losses in the previous session, as improving global risk sentiment and diverging monetary policy expectations between Europe and Japan fuel renewed interest in the pair. As of the European session, EUR/JPY is trading around 162.40, bolstered by a sharp drop in demand for the Japanese Yen, which has historically served as a safe-haven asset in times of uncertainty.

This shift in sentiment comes on the heels of optimistic developments surrounding US-China trade relations. In a move that lifted market confidence, former US President Donald Trump voiced support for easing tariffs on Chinese imports, a gesture met with reciprocal action from Beijing, which announced exemptions on select US goods previously subjected to punitive duties. Although still tentative, this signals a thawing in the long-standing trade standoff between the world’s two largest economies and has injected a measure of calm into global markets.

The Japanese Yen’s weakness underscores a broader market transition away from safe-haven assets. Investors are rotating capital into risk-sensitive currencies and equities, reflective of growing hopes that trade tensions may de-escalate in the near term. The Yen, typically favored during times of geopolitical and economic stress, is seeing diminished demand as traders pivot toward higher-yielding alternatives.

Meanwhile, attention is turning to the Bank of Japan’s upcoming monetary policy meeting scheduled for Thursday. While most analysts expect the BoJ to hold interest rates steady amid lingering concerns over Japan’s fragile economic outlook, the recent uptick in inflation has introduced an element of uncertainty. Should inflationary pressures persist, the BoJ may find itself reconsidering its ultra-loose stance a move that could eventually support the Yen, though such a pivot appears unlikely in the immediate term.

Moreover, speculation is growing that a swift trade pact between the US and Japan should one materialize could embolden Japanese policymakers to entertain the idea of policy normalization. Such a move would represent a notable departure from the BoJ’s traditionally cautious tone and set it on a different trajectory than the Federal Reserve, which is increasingly expected to tilt dovish as global growth moderates.

On the other side of the currency cross, the Euro is grappling with its own set of challenges. The European Central Bank appears to be firmly committed to an accommodative stance, as reinforced by recent remarks from ECB Governing Council member Olli Rehn. Speaking on Monday, Rehn suggested that the central bank may need to push interest rates below the so-called neutral level to sustain the Eurozone’s faltering recovery.

His comments come amid a backdrop of persistent economic malaise in Europe. Earlier this month, the ECB slashed rates for the seventh time this year, a clear signal that policymakers remain concerned about the region’s vulnerability to external shocks, including ongoing geopolitical tensions and weakening global demand.

Market expectations for further rate cuts have intensified sharply in response. According to LSEG data, traders are now pricing in a 75% probability of another ECB rate cut by June up significantly from just 60% a few weeks earlier. This dovish tilt has added downward pressure on the Euro, potentially capping the upside for EUR/JPY despite broader risk-on flows.

Technical Analysis

From a technical standpoint, the EUR/JPY pair found a temporary floor near 161.90, just above the 55-day moving average. This level has emerged as a crucial support zone following Monday’s sell-off, which briefly pulled the pair below the 163.25 resistance line a level that has consistently served as a barrier to upside momentum in recent weeks.

The ability of the pair to stabilize above 161.90 suggests that bullish momentum may be reasserting itself. Analysts now anticipate a renewed push toward breaching the 163.25 resistance level. Should this breakout materialize, the path could open toward the next upside targets at 164.20 and potentially 164.90, provided market sentiment remains constructive.

The expected trading range for the session is seen between 161.85 and 163.25, with a general bias favoring the bulls. A confirmed break above 163.25 would reinforce the positive technical structure and signal the resumption of the broader uptrend.

TRADE RECOMMENDATION

BUY EURJPY

ENTRY PRICE: 162.40

STOP LOSS: 161.00

TAKE PROFIT: 164.90

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

WTI remains under pressure as US-China trade frictions, looming supply increases from OPEC+, and progress in Iran nuclear talks dampen investor appetite. Technical setup signals potential for further downside.

SELL WTI

Close Time

CLOSED

60.800

Entry Price

55.000

64.000

60.018 +0.209 +0.35%

108.3

Pips

Profit

55.000

59.717

Exit Price

60.800

Entry Price

64.000

West Texas Intermediate (WTI) crude oil continues to face significant headwinds, with prices hovering just above a one-and-a-half-week low during Tuesday’s Asian session. Currently trading in a tight range near $61.75 per barrel, WTI has struggled to attract buyers amid escalating global concerns. Mounting uncertainty surrounding the US-China trade war, an expected increase in output from the OPEC+ alliance, and signs of progress in the Iran nuclear deal have all combined to apply broad-based pressure on the commodity.

Market participants are increasingly cautious, with oil bulls notably absent despite a broadly weaker US dollar. The combination of macroeconomic and geopolitical headwinds has cast a shadow over oil’s near-term outlook, with sentiment remaining fragile as investors brace for a potential breakdown below key technical support levels.

At the core of the current bearish sentiment is the persistent uncertainty in US-China trade negotiations. While sporadic statements from both sides hint at potential progress, the lack of a definitive resolution continues to rattle markets. The two economic giants are deeply entrenched in a tit-for-tat tariff war that has already weakened global manufacturing activity and raised fears of a broader economic slowdown. For crude oil, which thrives on robust industrial demand and international trade, the implications are profound.

The threat of demand destruction is real. As the world’s two largest economies engage in prolonged economic sparring, the ripple effects are evident across energy markets. Investors are increasingly pricing in the possibility of a global recession a scenario that would severely curb fuel consumption across industries, transportation, and logistics.

Adding to the demand-side gloom is a re-emergence of supply-side risks. Several members of the OPEC+ alliance are reportedly pushing for a faster pace of production hikes for a second consecutive month in June. The group, which includes both OPEC and its allies led by Russia, had earlier committed to gradually unwind the record output cuts instituted during the pandemic. However, the recent calls to accelerate the process signal growing internal pressure to reclaim market share even at the cost of lower prices.

This shift in tone from OPEC+ coincides with rising optimism around a possible revival of the 2015 Iran nuclear agreement. If the deal materializes, the lifting of US sanctions could pave the way for the return of up to 1 million barrels per day of Iranian crude to global markets. Such an influx, in a market already battling demand-side anxieties, would further tilt the balance toward oversupply.

Combined, these factors paint a troubling picture for crude bulls: while demand expectations are being downgraded, supply forecasts are being revised upwarda classic recipe for lower prices.

Ordinarily, a weaker US dollar would provide some relief to dollar-denominated commodities like oil. However, even the broadly bearish sentiment surrounding the greenback has failed to lift crude prices. This decoupling signals just how pervasive the negative oil sentiment has become—investors are focusing more on fundamental oversupply and demand destruction risks than on currency tailwinds.

The USD's weakness stems from increasing market bets that the Federal Reserve may be nearing the end of its tightening cycle, or potentially even pivoting in the medium term. Still, without a corresponding improvement in risk appetite or macroeconomic indicators, oil markets remain vulnerable to further downside.

Technical Analysis

From a technical perspective, WTI crude is showing signs of further deterioration. Prices are currently testing an overlap resistance near $62.04 a level that previously served as support but now acts as a ceiling. A failure to break above this threshold could trigger renewed selling pressure.

We are eyeing a potential downside extension toward $55.00, which aligns with a swing-low support zone and coincides with the 61.8% Fibonacci retracement level an area that often attracts buying interest in oversold conditions. However, a clean break below this zone could open the door to deeper declines, especially if macro conditions continue to deteriorate.

Brent crude, WTI’s international counterpart, is also exhibiting technical weakness. A double bottom pattern formed during a recent bullish correction has now failed to deliver upside momentum, with prices sinking below the 50-day Exponential Moving Average (EMA50). The breach reinforces the bearish scenario and suggests that further downside may be imminent unless a fundamental catalyst shifts the narrative.

TRADE RECOMMENDATION

SELL WTI

ENTRY PRICE: 60.80

STOP LOSS: 64.00

TAKE PROFIT: 55.00

Risk Warnings and Disclaimers

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