Copper price expect to consolidate above crucial support

Copper prices have paused their recent fall, and were able to recover from a seven week low. Prices found support amid optimism that the U.S. Federal Reserve has finished its current hiking cycle and will hold interest rates where they are for the time being.

Further, prices inched higher as Chinese markets reopened after the Golden Week holiday. With recent data showing that consumer spending and travel demand rebounded in the country.

But copper was still set for a third straight week in red. As markets feared that worsening economic conditions will erode demand for the metal. Chinese manufacturing activity also unexpectedly shrank in April.

Moreover, Weakness in the dollar also benefited bullion prices. As the greenback tumbled after the Fed meeting, tracking a slide in U.S. Treasury yields.

Dollar fell on Wednesday after the Fed raised interest rates on Wednesday by 25 basis points as widely expected. And crucially no longer “anticipates” further rate increases will be needed to tame inflation.

In an overt shift, the central bank no longer said it “anticipates” further rates will be needed. Only that it will watch incoming data to determine if more hikes “may be appropriate.”

The pause would give officials time to assess the fallout from recent bank failures. Wait on the resolution of a political standoff over the U.S. debt ceiling, and monitor the course of inflation.

The Fed did not explicitly commit to ending its hiking cycle. Helping to lift the dollar off session lows reached immediately after the central bank released its meeting statement.

Technical Outlook

Copper prices had a volatile trade last week. After hitting a weekly high 760.95, prices retreated towards 733.30 and settled at 743.60. With a gain of 0.14% on  a weekly basis.

On the above weekly chart, A bullish harami candlestick was noted on the chart, which is creating a probability for a short time pullback in near future.

Adding to this, , prices found support of 100 SMA, and consolidating above it since 27 April 2023, which also indicates some consolidation unless prices break below this support levels.

Hence, for the week prices may show positive consolidation, and any dip towards 738-736 will attract short term recovery. And prices may test immediate resistance 765-778.00.

 On the downside, crucial support is seen at 730.50 and a break below it only prices may extend recent fall. It could test 722.00-715 next support very soon.