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Oil slips on demand worries, USD strength. USD/JPY rises above 132.00 ahead of tomorrow's CPI data, on BoJ speculation.
 

Oil slips on demand worries, USD strength

After rising to a 2-week high on Friday, oil prices have slipped back at the start of the week amid concerns of slowing global growth and in jittery trade ahead of tomorrow’s U S inflation report.

Oil rose at the end last week after cut supply by gas barrels per day. However, today's rise suggests that that figure was already largely priced in.

Global economic growth is also dragging on risk sentiment. While China’s post-Covid economic recovery is expected to drive demand this year, weaker-than-forecast inflation suggests that the recovery could be slow in getting off the ground.

Jitters showing the USD is rising ahead of tomorrow's US inflation report, which is expected to show that inflation did cool further in January but still remains relatively high, which could mean more rate hikes to come. This could dampen growth prospects and boost the USD.
 

Where next for oil prices?

Oil has rebounded off the 72.40 February low and has risen back above the rising trendline dating back to early December and the 50 sma, which along with the RSI rising above 50 keeps buyers hopeful of further upside.

Bulls will look for a rise above 80.50, last week’s high, to extend gains towards 82.60 the January high and 83.30, the December high. A rise above here exposes the 100 sma at 85.00.

On the flipside, immediate resistance can be seen at 77.45 the 50 sma and rising trendline support. A break below here opens the door towards 72.40.

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USD/JPY rises ahead of tomorrow's US CPI & on BoJ governor speculation

USD/JPY has above 132 at the start of the new week adding to gains from the previous week. The no pair there is no .2% marking the fourth straight week of gains.

The US dollar is pushing higher as investors await tomorrow’s inflation data. Investors are growing anxious that CPI could be stickier than feared after the strong January jobs report, a rise in consumer confidence, and a rise in used vehicle prices.

The market is now pricing in two 25-basis point rate hikes in March and May at a probability of 75%. Fed speakers have been unwavering in the hawkish stance, with Philadelphia Fed president Patrick Harper the latest to push back on the prospect of a rate cut this year.

Separately the yen is falling amid mounting speculation that Kazuo Ueda will be selected as the next BoJ Governor when Kuroda steps down in April. His comments that current monetary policy is appropriate dashed hopes of a less dovish stance from the BoJ.

Japan’s GDP is due later and is expected to show that the economy rebounded in Q4, rising 0.5% after contracting -0.2% QoQ in Q3.
 

Where next for USD/JPY?

After falling to a low of 129.80 last week, the price has rebounded higher, testing resistance at 132.20 the 50 sma.

The long lower wick on Friday’s candle suggests that there was little demand at the lower level, which combined with the RSI over 50 keeps buyers hopeful of further upside.

Buyers will look for a rise over 132.20 and 132.90 the February high to expose the 100 sma at 134.10. The price has traded below the 100 sma since early December.

On the flip side, should sellers successfully defend the 50 sma, sellers could loo for a move below 129.80 to create a lower low and head towards 127.20 the 2023 low.

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