WEEKLY REVIEW: Oil prices remain the key driver of the financial markets

Oil prices were volatile again this week. Oil prices were supported by news that Russia and Saudi Arabia agreed to freeze the oil production at the level of January if other oil producers join. It is unclear if other oil producers will join. Iran plans to boost its exports to the pre-sanctions level.

Only oil output cut will help to stabilise the oil market but oil producers (not all) are not ready to lower their oil production. Saudi Arabian Foreign Minister Adel Al Jubeir said in an interview on Thursday that Saudi Arabia was not ready to lower its oil output.

Oil prices will remain volatile until a deal on an oil output cut is reached.

Further drop in oil prices weighs on inflation. The European Central Bank (ECB) is likely to add further stimulus measures as it said that downside risks rose since the beginning of the current year. ECB officials are concerned about increased risks of second-round effects.

Speculation on further monetary policy easing is likely to weigh on the euro.

The Fed's monetary policy also remain in focus. Fed's officials have different opinion. Some officials said that the U.S. will continue to improve, while other officials noted that developments abroad would a have a negative impact on the U.S. economic growth.

Consumer price inflation in the U.S. remains low but rose in January. It is too early to say if the data is strong enough to hike interest rate in March.

It is likely that the currency pair EURUSD will rise toward the resistance level at $1.1200 or at $1.1300, if the U.S. economic data will be negative or there will be negative news from China and no negative news from the Eurozone.

If the U.S. economic data will be positive and in case of the negative news from the Eurozone, the currency pair EURUSD may test the support level at $1.1000.