Two trades to watch: EUR/USD, WTI oil
Fiona Cincotta July 8, 2021 2:49 AM
EUR/USD consolidates around 1.18, ECB strategy report & US jobless claims in focus. WTI oil looks to OPEC+, EIA inventories for further clues.
EUR/USD consolidates ahead of ECB strategy report, US jobless claims
EUR/USD holds steady ahead of the European session consolidating around 1.18 after three straight sessions of heavy losses.
The minutes from the Federal Reserve June policy meeting confirmed that the central bank is moving towards tapering its asset purchases, potentially as soon as this year. Although policy makers also said that more progress towards economic recovery was needed first.
Reports are also swirling that the ECB have agreed to raise their inflation goal to 2% and allow for overshoot when needed.
Christine Lagarde is due to speak on the ECB’s pricing strategy.
US initial jobless claims are expected to show a steady decline to 350k, down from 364k and a new post pandemic low.
Where next for EUR/USD?
EUR/USD has traded under pressure since the start of June. The pair trades below its descending trend line, below its downward sloping 50 & 100 sma on the 4 hour chart, in an established bearish trend.
The pair briefly broke below the key 1.18 level yesterday hitting a low of 1.1781 a multi-month low. The pair has since picked up and it attempting to retake 1.18. The RSI is firmly in bearish territory, although points higher giving some mixed signal.
Any meaningful move higher needs to break above 1.1835, yesterday’s high, failure to break higher here would keep the bearish bias in place and further downside could be expected. A break below today’s low of 1.1790 could see the pair move lower to 1.1760 horizontal support ahead of 1.17 round number.
A move above 1.1835 could open the door to 1.1850 a level which has offered both support and resistance over the past 3 weeks. 1.1860 could also offer resistance, the descending trendline support and 50 sm. It would take a move above 1.1880 for the buyers to gain traction.
Oil awaits further clues from OPEC+, EIA inventories
Crude oil remains depressed as uncertainty surrounding OPEC+ production outlook weighs on sentiment.
Failure of the group to agree to a output increase has raised questions about co-operation in the group boosting concerns of a price war breaking out for market share, echoing last year’s incidence.
Dollar strength following the FOMC minutes is adding to the negative tone surrounding WTI.
Weekly EIA inventory data will be in focus. Yesterday the API report indicated a 8 million barrel draw in the previous week. Should the EIA data confirm this, this could offer some support to oil prices.
Where next for crude oil?
After touch a 3 year high on 6th July, oil has traded under pressure. Oil has fallen through its 21 day sma, before finding support on the ascending trendline dating back to November.
The bearish crossover on the MACD is supportive of further declines.
Any move lower would need to break below 7070, yesterday’s low and ascending trendline support in order to attack support at 70.00 the key psychological level ahead of 69.00 the 50 sma.
Any recovery would need to retake the 21 sma at 72.44 and horizontal resistance at 74.40 in order to look back towards 76.00 and the 2018 high at 76.88.
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.