Oil rises to 2-month high ahead of EU vote
Oil prices are rising, trading around a 2-month high boosted by optimism surrounding the easing of COVID restrictions in China and ahead of a key EU vote on the banning of Russian oil imports.
Leaders of the EU are due to vote again at the EU summit where they will discuss a sixth round of sanctions on Moscow.
Given the recent rise in oil prices, it would seem that the market is fairly convinced that the EU will approve the ban, which has been modified slightly to allow countries such as Hungary a grace period within which it must find alternative supply streams.
A ban would tighten an already tight market, particularly given the OPEC+ which meets later this week shows no sign of increasing output above the previously agreed level of 432k bpd for July.
Where next for oil prices?
Oil continues to rise, trading above its multi-month rising trendline, its 20 & 50 sma. The 20 sma has crossed up the 50 sma in a bullish signal, which combined with the bullish RSI keeps buyers optimistic of further gains. A move above resistance at 116.30 the March 24 high is needed to attack 120.00 the round number.
On the downside, a move below 108.90 the 20 sma, opens the door to 105.45 the 50 sma and 103.74 the rising trendline support negating the nearside uptrend.
EURUSD rises ahead of German inflation, EZ consumer confidence
EURUSD rose 1.6% last week and is on the rise again as the new week kicks off.
The euro is capitalising on the weaker USD as ECB – Fed central bank divergence narrows. ECB officials last week adopted a more hawkish stance, which aggressive Fed bets eased on optimism that US peak inflation has passed, at least for now.
German inflation data is expected to show that consumer prices rose to 7.6% YoY in May, up from 7.4% in April.
Eurozone business climate and consumer confidence data is also due later.
In addition to data, the EU Summit will be in focus.
The USD could trade quietly in holiday-thinned trading ahead of a speech by Fed Waller.
Where next for EUR/USD?
EURUSD has rebounded off the 2022 low of 1.0350 recapturing the 20 sma and is currently testing resistance at the 50 sma. The RSI is supportive of further gains.
Buyers will need to break above the 50 sma and the April 14 low of 1.0755 which could prove a tough nut to crack. Beyond here 1.0940 the later April high comes into play.
On the flip side support can be seen at 1.0640 the May 5 high to expose the 20 sma at 1.0570, with a move below here negating the near term uptrend and opening the door to 1.0470 the April low.