Two trades to watch: EUR/GBP, WTI oil
Fiona Cincotta October 11, 2021 11:31 AM
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.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.