Risk appetite returns despite rising oil prices
EURUSD => The euro rises above 0.99
BTC/USD => The cryptocurrency rises above 20k
Oil => The commodity rises to a 3-week high
EUR/USD awaits the ECB minutes
EURUSD fell 1% in the previous session as the USD rally resumed, and disappointing eurozone data dragged the common currency lower. The euro fell after the composite PMI, a good gauge for business activity, fell by more than expected in September, adding evidence to the expectation that the eurozone slipped into recession in Q3. Meanwhile, the USD rallied after the ISM services and ADP private payroll came in ahead of forecasts, supporting the view that the Fed will hike rates aggressively throughout the year. Today, the euro is rising on improved risk sentiment and ahead of the minutes of the September ECB meeting. The market will look for further clues as to where policymakers see rate hikes going. Eurozone retail sales will also be in focus.
Where next for the EUR/USD?
EUR/USD rebound from 0.9535, the 2022 low, ran into resistance at parity, the psychological level, and the 50 sma. The price fell back and is testing the 20 sma at 0.9880. The RSI is neutral, so giving away few clues. Buyers will look for a rise over 1.00 to test 1.0050, the September 20 high, and falling trendline resistance. Sellers will look for a break below the 20 sma to open the door to 0.98, the falling trendline resistance, with a breakthrough here bringing 0.9535 back into the picture.
BTC/USD rises despite rising inflationary pressures
BTC/USD is rising as investors shrug off hawkish comments by the Fed and downplay the impact of rising oil prices. Bullish sentiment is helping to pull the USD lower, and BTC/USD trades at 20,400, up 1.8%. The cryptocurrency has taken the move by OPEC+ to reduce oil output, lifting prices in its stride. Typically, higher oil prices mean higher inflation and more rate hikes from the Fed, dashing hopes of any dovish pivot. The stronger-than-expected jobs report and ISM services have reminded investors that the economy is still strong, for now. Still, with US futures pushing higher today, Bitcoin is following suit.
Oil rises after OPEC cuts by 2 million
Oil prices surge after OPEC+ cut oil production by 2 million barrels per day in order to stabilise prices which have been falling since mid-June. Global recession fears have seen oil prices slump from $129 per barrel to around $85 as central banks raise interest rates and slow growth. Still, the size of the oil output cut was larger than most had expected and marks one of the largest cuts in OPEC’s history. It unsurprisingly drew criticism from the White House, which called the decision short-sighted. The cut will come into effect from November. OPEC+ also announced that meetings will now be bi-monthly rather than monthly. Oil trades 10% higher so far this week.
Support can be found at 83.70 (20 sma) and 79.50 (October low).
Resistance for the pair can be seen at 88.20 (50 sma) and 90.70 (September high).