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Copper ReversingCopper prices have come under heavy selling pressure today with the metal extending the correction lower away from the 4.1585 level. On the back of the more than 13% rally we’ve seen off the YTD lows, copper futures have stalled for now into the resistance level. The move has been attributed in part to profit taking and a firmer US Dollar ahead of the FOMC tomorrow.
China ImpactCopper prices had initially been higher at the start of the week in response to better data out of China. Industrial production was seen rising to 7% last month, above the 5.3% the market was looking for. However, optimism over the data proved short lived with the US Dollar rally taking centre stage. Indeed, USD continues to trade higher this week despite the BOJ hiking rates for the first time in 17 years, a move which has seen JPY weakening sharply.
Fed Up NextLooking ahead to tomorrow, the outlook for copper prices hinges on whether the Fed continues to downplay near-term rate-cut chances. If the Fed is seen sticking to its guns, and pricing for a June/July cut weakens, this should see USD continue higher for now, leading copper prices lower. On the other hand, if we see the Fed signalling the prospect of easing in coming months, this should help copper prices recover as USD unwinds. Special attention will also be on the updated dot plot forecasts which hold the potential to create plenty of volatility if we see any change.Technical ViewsCopper 
The rally has stalled for now into a test of the 4.1585 level with price now turning sharply lower. The focus now will be a retest of the broken 4.0150 highs with deeper support sitting at 3.9410. Bulls will need to defend this area to keep the focus on a fresh push higher. More By This Author:Japanese Yen Commentary – Tuesday, March 19Bitcoin Commentary – Tuesday, March 19Crude Oil Commentary – Monday, March 18
