Two trades to watch: EUR/USD pushes above 1.2150, WTI after Goldman Sachs' bullish call on oil

EUR/USD picks up from session lows and re-takes 1.2150 on cautious market optimism WTI extends gains after Goldman Sachs sees solid rebound in oil prices by mid 2021. API data in focus

FOREX 4

EUR/USD rebounds above 1.2150 

• Cautious optimism along with the USD taking a breather as treasury yields stabilize at 1.15% is helping EUR/USD pick up from session lows and retake 1.2150. 
• Surging covid cases, vaccine rollout and US politics remain in focus.
• There is no high impacting economic data leaving sentiment & covid developments in the driving seat

EUR/USD technical analysis

EUR/USD fell for a third straight session on Monday – the pair’s longest losing streak since the end of October. The 4 hour chart favours the bears as the price trades below the 20 & 
50 sma and the 20 sma has also crossed below the 50 sma in a bearish signal suggesting the pair could be on track to test 1.2057 December’s low.

The RSI is in bearish territory however it has rebounded off 30 and is pointing higher. 

EUR/USD has picked up off session lows of 1.2138 and is attempting to claw back lost ground although appears to lack conviction. 

A move above today’s high at 1.2175 is needed to target 1.22 yesterday’s high and the 20 sma. A move beyond the 50 sma at 1.2250 could negate the current bearish trend.

Failure to capitalize on this move higher could see EUR/USD take out support at 1.2138 today’s low prior to 1.21 low 11th December and 1.2050 December low.

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Where next for crude oil prices?

• WTI continues its impressive bullish run advancing for 6 of the past 7 sessions and pushing over $52.
• Helping the case for oil, Goldman Sachs made a bullish call that Brent (currently at $55.50 bp) will rise to $65 by mid-2021 amid a sharp rebound in demand. It expects to see the Saudi output cut and global vaccine rollout to result in a fast tightening of the market.
• Meanwhile rising covid cases and tighter lockdowns conditions are strong headwinds for oil. 
• API crude oil inventory data due later is expected to show a drawdown in inventory for the 5th straight week.

Oil technical analysis

Oil trades +0.7% at the time of writing. It trades above its 20 and 50 sma on the 4 hour chart showing an establish bullish trend.

The RSI has pushed to 70 into overbought territory so a pull back could be on the cards within the bullish uptrend

Oil also appears to be considering a move above its week old ascending resistance line and its 11 month high at $52.70. Should the bulls refresh this multi month top $54.70 could come into play.

Failure to extend gains beyond $52.70 could see WTI revisit yesterday’s low and the 20 sma of $51.50 prior to  $50.40 swing low 7th Jan and key psychological support at $50 which is also the 50 sma.

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