Just a quick note from me today.
USD Index Clicks Into Place
In yesterday’s analysis, I wrote that Trump’s declaration of progress didn’t materially change anything, and the markets appear to be realizing this too. Yesterday’s rebounds in multiple markets appear to be over – exactly as the triangle-vertex-based reversal in the USD Index had indicated. Quoting my yesterday’s analysis:
“Technically, it looks like USD’s consolidation is done or almost done. Why? Because two support lines cross more or less now and those triangle-vertex-based points were an accurate indication of trend reversals many times in the past – across many markets, including the USD Index.”
This technique worked once again. Technicals worked.
400-Million-Barrel Mismatch
And the same goes for the fundamentals. Namely, the Strait of Hormuz is still closed. And that's the key point that overrides everything else.
Today, the G7 announced the largest strategic petroleum reserve release in IEA history: 400 million barrels. IEA Executive Director Fatih Birol called the oil market challenges "unprecedented in scale." He's right about that. But the response, while historic in size, is not historic in what it solves.
Let me put 400 million barrels in context. The Strait of Hormuz handles roughly 20 million barrels per day in normal conditions. So, the entire record-breaking release covers about 20 days of lost Hormuz flow. That's it.
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