Anxiety and Imbalance. Will the Current Trend Persist?

Gloomy trading on the US exchange Tuesday, which ended in the decline of a number of core US indexes and stocks, also put a damper on trading in the Asia-Pacific region, where indexes were mixed. After short-lived attempts to rise, Japan’s Nikkei 225 finally fell another 0.45%, preserving the positive trend, although with an obvious delay. Technical indicators also point in this direction. They indicate buying opportunities only in the weekly and monthly terms and moderately negative sentiment in daily trading.
Overall, the index sagged on a decline in the construction sector; the greatest growth was seen only in mineral production and metallurgy. Also noteworthy is the Japanese yen’s rise relative to the US dollar, which admittedly was brief: at the time of this writing the USD/JPY pair is trading at the 111.62 mark. By all appearances, on Thursday the pair will again trade with a support at 110.85 and a resistance at the key 112 level. On Thursday, the Nikkei 225 may continue the current downtrend, which points to a potential loss of another 0.3-0.55% after trading opens.
It is also worth noting what is going on with Toshiba stock, which is falling more than 2.3% on the sale of a division that makes microchips for the government. The prospects for this deal are not yet entirely clear, but the market currently is reacting negatively.
The remaining Asian indexes are trading in the red with a few exceptions: South Korea’s Kospi lost about 0.49%, and on Thursday will likely continue falling because of negative conditions in the precision manufacturing sector. Hong Kong’s Hang Seng also sagged 0.57%, while, by contrast, the Chinese Shanghai Composite rose by 0.52%.

The majority of investors in the Asia-Pacific region and in Europe are worried about the oil market, since the price of both benchmark grades of crude oil is still falling and will continue to do so in the near term: OPEC+ agreement has not had as much of an effect as one would like to see. And, despite verbal interventions by a number of Saudi Arabian representatives, the market still cannot find equilibrium. The growth in US shale oil production is also adversely impacting US oil: a barrel of Brent is trading at the $45.50-46/barrel mark and tending toward a further decline. WTI oil is trading at $42.50-43, which is also approaching its key cost threshold of $40, which is considered the outer limit for break-even production. For now, it is worth noting that Brent may test the $45 mark and WTI the $42 mark before the end of the week.

On Wednesday European currencies regained some of their losses on the US dollar’s decline: the EUR/USD pair was able to break through 1.115, although it was unable to stay there. On Thursday, it appears that an attempt to test both the price range’s upper boundary at 1.12 and its lower boundary at 1.11 is still possible.
The pound sterling is trading similarly: the GBP/USD pair took off from yesterday’s lows and rose to 1.27, breaking though this level, but then fell, and is now trading close to 1.2672-1.265. Most likely the pound might try to consolidate on Thursday, the target returning to the 1.2705 mark.

Yuri Prokudin, Olymp Trade analyst

Olymp Trade Review