The stunning announcement of a 1.16 million per barrel supply cut by the Organization of the Petroleum Exporting Countries, including Russia (OPEC+), shortly pushed the GBPJPY currency lower. Still, the market swiftly corrected the impulse-driven selloff to continue the longer-term trend. OPEC+ announced on Sunday that due to the organization’s struggles to meet its current targets.
Following the recent macroeconomic indicators, the supply cut could complicate the outlook for inflation and interest rates outlook for major economies, which showed that inflation was slowing down in most economies. Investors have been betting that major central banks could pause the current monetary policy tightening. If the oil prices remain high, it could leave a bitter taste in consumers and inflation.
Technical
The 4H chart shows that The Beast failed to break through the 23.40% Fibonacci level, which could give the bulls the needed boost to test the resistance level at 165.455. The breakthrough above the resistance level could signal the presence of buyers and could push the price action towards the 28th of February 2023 high of 166.007.
Suppose the move away from the 23.40% Fibonacci level is not sustained, and the price action retraces. Then a breakthrough below the support level at 163.739 could signal a short-term bearish momentum. The momentum could pull the price action further down below the 163.003 support level, which could bring the 50-day moving average and the 61.80% Fibonacci level (the “golden ratio”) into play.
Summary
The market seemingly has corrected the sudden selloff due to the OPEC+ supply shock surprise, as investors apparently had already factored in a supply cut due to increased inventories in the previous weeks. A potential is that the price action could consolidate between the 23.60% Fibonacci level and the resistance at 165.455 in the short term. Thus, the bulls could look at a break above the 165.455 resistance level for a potential trading opportunity.
Sources: TradingView, Economies.com.
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