Two trades to watch: EUR/GBP, WTI oil
Fiona Cincotta October 11, 2021 6:31 PM
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
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.
How to trade with City Index
Follow these easy steps to start trading with City Index today:
- Open a City Index 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.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.