Key Events
- Fed rate cut expectations remain priced into sentiment until Wednesday and could reverse market gains unless the FOMC statement introduces a surprise element.
- Mega-cap earnings between Wednesday and Thursday are expected to influence overall market sentiment.
- The U.S. government shutdown enters day 27, maintaining a cloud of risk over market gains.
A slightly lower-than-expected US CPI reading, from 3.1% to 3%, has kept the DXY hovering near the 99 mark. Uncertainty surrounding the jobs market continues to support rate-cut sentiment, alongside shutdown risks, lifting U.S. indices, USD pairs, and helping commodities stabilize near key support levels.
Crude oil still faces risks of a decline toward new 2025 lows near the 49 mark before a long-term reversal amid oversupply and tariff concerns. However, a sustained hold above the yearly low at $55 could establish a long-term double-bottom pattern, paving the way for potential long term gains. This would align crude’s long-term outlook with global growth in AI and digital infrastructure investments, which are increasingly energy-intensive and supportive of structural demand.
The FOMC meeting and mega-cap earnings this week — including Microsoft, Google, and Meta on Wednesday, and Apple and Amazon on Thursday — are also likely to shape market sentiment and imply short-term volatility risks, as outlined in the technical analysis scenarios below.
Technical Analysis: Quantifying Uncertainties
USOIL – Daily Time Frame – Log Scale
Source: Tradingview
Following a rebound from the 2025 low at $55, crude oil has reclaimed levels above the $60 mark, holding near the mid-zone of the descending channel established since June 2025.
The next upside target lies at the upper boundary near $65. A confirmed close above that could extend gains toward $70, testing a potential long-term bullish breakout or a pullback within the descending price channel that has persisted since September 2022.
On the downside, if prices remain below the $60 mark, the trend may retreat toward the 2025 lows near $58.40 and $55.
A confirmed close below those levels could open the door to new yearly lows near $52 and $49.
UK OIL: Weekly Time Frame – Log Scale
Source: Tradingview
Similar to U.S. oil, Brent crude is holding above the mid-zone of a well-respected down trending channel that has been in place since December 2023, trading above the $60 mark.
The weekly RSI has moved from its overbought peak in 2023 to an oversold trough in 2025, potentially forming a complete downtrend cycle. The recent bounce between April, June, and October 2025 sets the stage for a potential short-term bullish continuation if prices close above $66, $68.70, and $70, respectively.
The $70 level remains the key barrier between a long-term bullish breakout and a continuation of the descending trend since 2022.
On the downside, a close below $60 could send prices back toward the 2025 lows near $58, with further downside risk extending toward $51.30.
Written by Razan Hilal, CMT
Previous Crude Oil Article: Oil Sanctions Escalate, WTI Bounces Back to $60
Follow on X: @RH_waves
