EUR/USD, Oil Forecast: Two trades to watch

EUR/USD struggles below 1.12 amid a quiet calendar

• USD recovers from a 13-month low
• Recent German data has been weak, supporting ECB cuts
• EUR/USD trades below 1.1150

EUR/USD is heading lower, giving back yesterday's gains. The US dollar rises off a 13-month low versus its major peers as risk sentiment sours ahead of Fed speaking and Nvidia earnings later today.

While the US dollar is edging higher, gains are likely to be limited. The US dollar has been battered recently as Federal Reserve speakers support the view that the US central bank will start to cut interest rates next month.

While the market is convinced of the rate cut, there's still uncertainty about its size. The market is unsure whether the Fed will go for a 25-basis-point rate cut or a 50-basis-point rate cut particularly in light of a large downward revision to US payrolls.

Today, the US economic calendar is quiet. Attention will be on Federal Reserve speakers, with governor member Christopher Waller speaking along with Raphael Bostic later in the day.

Attention will also be on Nvidia’s earnings which is a litmus test for the AI trade and are likely to influence risk sentiment.

Meanwhile, the euro is struggling after a bout of weak data from Germany, the eurozone's largest economy. Yesterday, German GDP data confirmed a 0.1% contraction in Q2, and German consumer confidence also tumbled amid rising concerns over the health of the labour market

Several ECB policymakers have highlighted concerns over growth as a reason to reduce interest rates further after reducing them by 25 basis points in June.

There is no eurozone economic data due today. Tomorrow, German inflation figures and USG Q2 GDP will be in focus.

EUR/USD forecast - technical analysis

The EUR/USD breakout ran into resistance at 1.12, and it is currently trading between 1.1140, the December 2023 high, and 1.12. The RSI is coming out of overbought territory.

Sellers will look to break below 1.1140 to extend the selloff to 1.10.

Buyers will look to rise above 1.12 to extend gains towards 1.1275, the July 2023 high.

Oil steadies ahead of EIA inventory data

• Oil fell 2% yesterday after gaining 7% in 3 days
• Geopolitical concerns continue to support the oil price
• Oil falls towards 75.00

Oil prices were unchanged on Wednesday after a sharp fall in the previous session, which snapped a three-day winning streak.

Oil prices fell over 2% yesterday after gaining more than 7% in the previous three days. Investors are weighing up concerns over potential supply losses and global demand worries.

Geopolitical risks have continued to hover over the market on worries the Israel-Gaza conflict could broaden out and include Iranian-backed militants from Hezbollah. Whilst tensions have escalated from the weekend, this still appears to be the largest risk to the oil markets.

Elsewhere in Libya several oil fields have halted output as closures spread amid a dispute between rival government factions and control of the central bank and oil revenue. The dispute is putting around 1.2 million barrels per day of production risk, although there has been no confirmation of closures from the Tripoli-based recognized government.

Meanwhile, US crude inventories fell by 3.407 million barrels last week, according to API data. Gasoline inventories also fell by 1.863 million barrels. EIA inventory data is due later today.

Oil forecast - technical analysis

Oil has recovered from the 71.50 low from last week before running into resistance at the 200 SMA at 77.80. The price has corrected lower heading towards 75.00.

Sellers will look to break below the 75-round number to open the door to 72.80, the June low. A break below here opens the door to 71.50, the August low.

On the upside, buyers will need to rise above the 200 SMA and 80.40 the August high. Above here the 82.50, the falling trendline resistance comes into play.