Copper price: bulls need to push past $4.3750 to reverse downtrend

Copper price is on a rebound, even as it remains on a downtrend. A stronger US dollar and China’s slowed economic growth are the key drivers.

Strengthening dollar

The rising US dollar is also weighing on copper price. As is the case with most commodities, the red metal is valued in dollars. As such, a strong greenback makes it more expensive for the metal’s buyers. On Friday, the better-than-expected nonfarm payrolls helped boost the US dollar. The positive JOLTs job openings data on Monday has further pushed the greenback higher.  

The dollar index, which tracks the value of the US dollar against a basket of currencies, is at a three-week high of $93.04. In the ensuing sessions, the focus will be on the US inflation data scheduled for release on Wednesday.

Analysts expect consumer prices to have risen by 0.5% in July MoM compared to the prior month’s 0.9%. With the exclusion of the volatile food and energy components, the core CPI is forecasted at 0.4%, which is lower than June’s 0.9%. Higher-than-expected figures are likely to boost the greenback while weighing on copper price.  

China’s economy

China is the leading consumer of industrial metals like copper. As such, figures on its economic growth tends to impact copper price. According to data released on Saturday by the country’s General Administration of Customs, the Middle Kingdom’s imports rose by 28.1% in July YoY compared to the prior 36.7% and forecasted 33.0%. Exports also grew at a slower pace of 19.3% YoY. The reading missed the estimates of 20.8% and the previous 32.2%.

Copper price technical outlook

Copper price is on a rebound after hitting a three-week low in the previous session. Notably, the red metal has been on a downtrend since 27^th July when it hit close to a one-month high at 4.6250. It has since declined by about 6.90%.

At the time of writing, it was up by 0.49% at 4.3105. On a four-hour chart, it is trading below the 25 and 50-day exponential moving averages. Besides, with the formation of a descending channel, the metal may record further losses.

In the near term, cooper price is likely to find resistance along the 25-day EMA at 4.3415. Additional buying pressure may push the price higher to 4.3750, which is along the 50-day EMA, before pulling back. On the lower side, a move below the current support level of 4.2800 will probably have the bears retesting Monday’s low of 4.2435.