WTI vs. US dollar; Which asset goes down first?

WTI kept the bullish tone as the commodity ended the week trading above its 50-DMA. Furthermore, the latest reports from OPEC indicated above 90% compliance with the first curbed output deal in 8-years. Therefore, all things being equal, the fundamental landscape seems to support further gains; unless?

On the other hand, the greenback – gauged by the US Dollar Index – has experienced renewed buying pressure as President Trump energized an anemic buck via the 'phenomenal taxes' headlines that seemed to promise massive investments from the oil industry and incentive-based tax breaks.

However, market dynamics seem to build a dark could over oil as the commodity is dollar denominated and historically the correlation has been strong. Therefore 'if' in 2-3 weeks Trump delivers a significant tax package that impresses the market, then lower oil prices could be expected as the dollar moves to post-election levels.

US: Key events ahead - Scotiabank

Technical levels to consider

In terms of technical levels, upside barriers are aligned at 55.22 (high Jan.3), then at 59.08 (high July 1, 2015) and above that at 61.54 (high June 25, 2015). While supports are aligned at 52.53 (50-DMA), later at 50.05 (100-DMA) and finally below that at 48.10 (200-DMA). On the other hand, Stochastic Oscillator (5,3,3) seems to head north after a robust consolidation. Therefore, there is evidence to expect further oil gains in the near term.

In terms of technical levels, upside barriers are aligned at 100.30 (50-DMA), then at 102.95 (high Jan.11) and above that at 103.81 (high Jan.3). While supports are aligned at 99.79 (100-DMA), later at 97.56 (low Nov.8) and finally below that at 95.65 (low Oct.4). On the other hand, Stochastic Oscillator (5,3,3) seems to change direction inside the overbought territory. Therefore, there is evidence to expect further US dollar loses in the near term.  

US dollar trims gains after US/Japan meeting