Two trades to watch: EUR/GBP, WTI oil

EUR/GBP extends gains as BoE could move to hike sooner. Oil prices keep on rising beyond $80.

EUR/GBP extends gains as BoE could move to hike sooner

EURGBP is pushing lower at the start of the new week, extending losses from the previous week.

The move lower comes after BoE policymaker Michael Saunders warned that households should brace themselves for a significantly earlier interest rate rise as inflationary pressure mount.

Rising energy prices and labour shortages mean that consumer inflation is expected to rise over 4% by the end of the year and remain elevated for longer than initially expected.

Meanwhile the ECB last week sent the Euro southwards after the minutes to the latest ECB meeting revealed that the central bank is looking into another bond purchasing programme for when the PEPP expires.

The central bank divergence is boosting GBP whilst dragging on EUR.

Learn more about the Pound

Where next for EUR/GBP?

EURGBP trades at an intraday low below 0.86. The pairs trades below its descending trendline dating back to late September and below its 20 & 50 sma on the4 hour chart.

The RSI is supportive of further downside whilst it remains out of oversold territory.

Immediate support can be seen at 0.8475, last week’s low. A break below here could open the door 0.8450 August’s low and year to date low.

On the upside, resistance can be seen at 0.85 the confluence of the 20 sma and the falling trendline. A move above here could see 0.8525 horizontal resistance come into focus ahead of the 50 sma at 0.8550

EURGBP Chart

Oil prices keep on rising beyond $80

Crude oil jumped again as the new week kicks off, extending solid gains from last week and trading at 7-year highs as the energy crisis tightens its grip.

Gas and coal prices have been surging as economies recover from the pandemic and economic activity picks up. The rise in the price of these commodities makes oil comparatively cheaper and more attractive.

There are reports of blackouts in some stats in India whilst China has ordered the ramping up of coal production as prices rally.

Meanwhile OPEC voted to stick to the output increase agreed in July.

US added five new oil wells last week.

Learn more about trading oil

Where next for oil prices?

WTI oil price is extending its rebound from $61.79 on August 20 trading within the ascending channel from this date.

The RSI has tipped into overbought territory so there could be a period of consolidation or even a slight ease lower on the cards before an uptrend is resumed.

The price has pushed above $80 the round number and is heading for resistance at 81.98 the November 14 high and the upper band of the rising channel.

Support can be seen at 78.30/40 the October 4 high and October 8 low. Beyond here watch for 76.50 the September high and 74.80 October 7 low.

WTI oil chart


 

 

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

  1. Open a Forex.com account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. 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.