Copper prices moved higher from its three-week low as the dollar retreated from a six-month high before key U.S. inflation data. Further, a hope that the worst had passed for China’s economy.
Red metal found some relief from the last two days as the dollar retreated from a near six-month peak on some profit taking ahead of US CPI data, set to release on Wednesday. The data is expected to show inflation growing at a faster pace than July. U.S. inflation is expected to have picked up amid higher fuel costs and resilient retail spending.
Adding to this, data released on Monday showed substantial improvement in Chinese lending activity through August, amid continued monetary support from the government.
The readings also came after data released over the weekend showed that Chinese consumer inflation recovered from deflationary territory in August. This ramped up hopes that China’s economy was turning around after a severe slowdown this year.
Technical Outlook
Copper prices have stalled its recent fall and gained nearly 1.5%. Pries rebounded from the low 720.60 and made a high 735.65, traded at 732.95 today.
On the above daily chart, prices crossed its immediate resistance of 733.50, coinciding with 38.3% Fibonacci Retracement. Now prices are assumed to gain further and could test next resistance 738.20-742.50 very soon.
Alternatively, on the downside crucial support is seen at 725.50 and break below only prices may retreat towards 720-718.00 again.