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Oil weakens on the strengthening dollar

Olymp Trade

Brent crude oil has declined after updating the local high at $65.4/b on Wednesday. As a result of several bearish impulses, the asset lost more than 3% from $65.4 and broke the $64.0 support level. The quotes returned to the $63.0-64.0 zone, where it was trading all last week. We can expect a further decline to the support level at $63.0.

The local high was recorded after the release of data on US crude oil inventories. The US Energy Information Administration reported a decrease in oil inventories of 8.5 million barrels, compared to the forecast for a decrease of 2.6 million. This was the seventh consecutive decline.

But later, like other commodity assets, oil collapsed due to the strengthening US dollar, which followed the US Fed interest rate decision. There was a 25 basis points cut to 2-2.25%. This was the first time the Fed had cut the rate since 2008, which went out in line with the forecasts made by analysts and market participants, although some experts did not predict the possibility of a more significant reduction by 0.5 percentage points. Eventually, the market was disappointed that the Fed had ruled out an aggressive monetary-easing campaign. Instead, Powell called the rate reduction a “mid-cycle adjustment,” which is expected to help the economy improve.

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Source: https://olymptrade.com/
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