Two trades to watch: EUR/GBP, Oil
Fiona Cincotta June 8, 2022 8:20 AM
EUR/GBP looks to eurozone GDP data ahead of tomorrow's ECB announcement. Oil rises in a tight market ahead of EIA data.
EUR/GBP looks to eurozone GDP data
EUR/GBP is edging higher in early trade after two days of declines.
German industrial production rebounded in April, rising 0.7% MoM, after falling -3.7% in March. Expectations had been for a 1% rebound.
The data comes after German factory orders fell -2.7% MoM in April, defying expectations of a rise of 0.4%.
The German manufacturing industry continues to navigate surging energy prices and supply chain disruption, exasperated by recent China lockdowns.
Eurozone GDP data is due later and is expected to confirm the 0.3% QoQ growth. The data comes ahead of the ECB monetary policy announcement tomorrow and amid concerns that aggressive central bank policy raises the risk of stagflation.
Where next for EUR/GBP?
EUR/GBP ran into resistance just shy of 0.86 and has eased lower finding support on the multi-week rising trendline. The move below the 20 and 50 sma on the 4-hour chart and the bearish RSI points to more downside to come.
Sellers will need to break below the trendline to attack 0.8480, the May 27 low, ahead of 0.8435, the May 23 low.
On the upside, buyers will look to retake the 50 sma at 0.8530 to negate the near downside trend and targets 0.8590 to create a higher high.
Oil rises in a tight market ahead of EIA data
Oil prices rose 0.7% in the previous session and are on the rise again today, pushing over $120.00 as tight supply and improving demand from China support the price.
Concerns over global growth limiting the upside. The World Bank cut its global growth forecast to 2.9%, down from 4.1% in January. The Russian war, plus COVID damage and surging inflation, mean that many countries now face recession.
Yesterday Goldman Sachs raised its Q3 oil outlook to $140 pb, up from $125.
API data showed that crude oil inventories unexpectedly rose by 1.845 million barrels last week. EIA data is due later.
Oil markets are expected to remain tight, reflected through falling inventories as the US driving season peaks.
Where next for WTI oil?
Oil trades above its multi-month rising trend line, 20 & 50 sma. The RSI supports further upside while it remains out of overbought territory.
The price ran into resistance at 119.00. Buyers need to break above this level to extend the bullish trend towards 125.00, the March 9 high, and 128.20, the 2022 high.
Support can be seen at 116.00, the weekly low, and March 24 high, with a break below here exposing the 20 sna at 113.00, negating the near term uptrend and opening the door to 110.00, the June low.
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