WTI approaching the $88.00 area with upside moves capped at $89.00

• Oil prices retreat from the $90.00 area to levels near $88.00.
• A strong US dollar, following Fed's decision is weighing on crude prices.
• WTI faces a key resistance area at $90.00.

WTI Oil might have peaked right above $90 this week, as crude prices pulled back on Thursday, to pare gains after a two-day recovery. The West Texas Intermediate has depreciated about 2%  so far today, weighed by the US dollar's strength.

The US dollar surges after Fed’s decision

A soaring greenback has been pushing crude prices lower after Wednesday’s US Federal Reserve monetary policy decision. The bank hiked rates by 0.75% as expected and confirmed its commitment to continue tightening borrowing costs.

Fed president, Jerome Powell surprised the market with a hawkish rhetoric at the press conference, where he refused the idea that the bank might have overtightened and suggested that interest rates may peak at levels above the market expectations. These remarks curbed investors' expectations of a dovish pivot in December and sent the US dollar surging across the board.

US macroeconomic data, however, have not been particularly dollar-supportive on Thursday, especially the ISM services PMI, which has shown a weaker-than-expected increase on the sector’s activity in October, triggering a moderate pullback on the USD.

WTI capped below trendline resistance near $90.00   

From a wider perspective, the WTI remains in its positive trend from late September lows, yet capped by the trendline resistance from early July highs, now at $90.00, which should give way to expose the 100-day SMA, at $91.50 before the October 10 high at 92.55.

On the downside, below session lows at $87.00, a successful move beyond the 50-day SMA and trendline support near $85.50 would negate the near-term bullish trend exposing the October 31 low at $84.70.

WTI daily chart

Technical levels to watch