Thursday October 14, 2010 - 17:07:17 GMT
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Forex Hound - www.forexhound.com
Crude Oil Gets Boost from Weaker Dollar, Inventories Decline
December Crude Oil is trading higher this morning, boosted
by the weaker U.S. Dollar and a surprise drop in reported inventories by the
American Petroleum Institute.
Late Wednesday, the API reported an unexpected drop in crude
oil inventories by 4 million barrels. At this time traders are waiting for
confirmation by todayâ€™s U.S. Energy Department inventories report. Current
guesses are for an increase of 1.5 million barrels in crude oil, a decrease of
1.5 million barrels of gasoline, and a 1.5 million barrel decline in
upside momentum is building which could trigger a breakout over the last swing
top at 84.43. This market could still encounter resistance at the .618 level at
84.67. A trade through 84.43 will help form a new swing bottom at 80.30.
The outlook for
the U.S. Dollar continues to remain bleak as traders continue to apply selling
pressure in anticipation of additional Fed easing.
A key member of
the European Central Bank talked up the Euro on Wednesday when he said the ECB
should end its asset buyback program. Since this comment came at a time when
the Fed is considering more quantitative easing, it exposed the Greenback to
more weakness. The Japanese Yen reached
a new 15 year high while both the Canadian Dollar and Australian Dollars are
rapidly approaching parity with the U.S. Dollar.
exposure to extremely oversold technical indicators, there doesnâ€™t appear to be
a reason for the Dollar to post a bottom at this time. Both the Federal Reserve
and the Treasury have said or done anything recently to help the Dollar,
thereby solidifying their unofficial stance that they prefer a weaker Dollar.
Overnight the Euro took out its recent swing top at 1.4028,
reaffirming its solid uptrend. A new higher swing bottom was also formed at
1.3775. A break through this level turns the main trend down on the daily
The Euro weakened a little after this morning reported rise
in U.S. Weekly Initial Claims, but this action was most likely profit-taking.
Based on the more important Fed news running through the market, the Euro is
likely to recover from its early session weakness.
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