US Dollar Index to ease lower on a Fed that is perceived as less hawkish – OCBC

 The US Dollar Index (DXY) is rising to the 110.00 area following Friday's retreat. This week’s FOMC meeting could send the DXY lower if the Fed is perceived less hawkish than expected, in the opinion of economists at OCBC Bank.

Caution to keep USD supported on dips in the lead-up to FOMC

“While a hawkish Fed is now the baseline scenario, we caution that a Fed that is perceived as less hawkish could see DXY ease lower post-decision. Meantime, in the lead-up to FOMC, expect caution to keep USD broadly supported on dips.”

“Support at 109.30 (21 DMA), 108.45 (38.2% Fibo retracement of Aug low to Sep high) and 107.70 levels (50-DMA, 50% Fibo).”

“Resistance at 110.30 before 110.78 (previous high).”

EUR/USD: A test of the March 7 low near 1.0805 is still in the cards – BBH

 The euro bounced after the French election but remains heavy near 1.09. Economists at BBH note that the EUR/USD pair may test the March 7 low near 1.0805.

Run-off will be held between Macron and Le Pen

“Macron got 28% of the vote vs. 24% for Le Pen in the first round. One early poll shows Macron winning 54-46% in the second round, while another one is a lot closer at 51-49%. We warn of the so-called Bradley effect, which suggests that the polls will likely understate Le Pen’s support. If polls tighten up ahead of the runoff, we expect markets to become more jittery.”

“A break above 1.1050 is needed to signal a deeper correction towards the March 31 high near 1.1185.” 

“A test of the March 7 low near 1.0805 is still in the cards.”

US discharges oil storage: Latest Update

The United States will release 50 million barrels of crude oil from its Strategic Petroleum Reserve along with China, Japan, India and South Korea, the White House said in a statement - an unprecedented effort that included coordination of the largest oil consumers to tame prices.  The decision to collectively "discharge" crude inventories after OPEC+ countries rejected calls to significantly boost output marked a diplomatic victory for the United States and challenged Saudi Arabia, Russia and other OPEC+ producers in the market.

 WTI oil prices are down 1.45% on the day to $75.64/barrel.

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