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ECB in the market’s focus

ECB expected to hike rates

Market focus is expected to be placed on ECB’s interest rate decision today. The bank is expected to hike rates and EUR OIS imply that the market has almost fully priced in such a scenario. Yet the market expects the bank to proceed with another rate hike in the December meeting. Hence the bank’s forward guidance is expected to be the main issue for the EUR’s reaction. Should the bank sound hawkish signalling more rate hikes to come we may see EUR getting some support as the market’s hawkish expectations could be enhanced, while a dovish forward guidance, signalling possibly the end of the hiking cycle could weigh considerably on EUR.  

US equities  remain subdued

US equity indexes ended marginally in the reds yesterday. Fundamentally, rising oil prices and rising bond yields tend to weigh on US equities. Also Apple in its event yesterday rolled out the foldable iPhone Duo starting at $1,999 while iPhone 18 Pro and Max got a $100 hike. Should the developments be reviewed favorably by tech experts, we may see Apple’s share price getting some support and vice versa.

Oil prices correct lower

Oil prices edged lower in today’s Asian session, yet on a fundamental level, ongoing tensions in the Middle East continue to provide support for oil prices. Oil flows through the Strait of Hormuz remain far lower than before the US-Iran conflict, while worries for more severe and prolonged disruption in the supply chains of the international oil market are enhanced, with no easing of tensions in sight at the current stage.  

Gold remains stable

Gold’s price edged higher, yet overall, the precious metal’s price remains relatively stable. We continue to view the inverted relationship of the USD with gold’s price as still being valid and a possibly weaker US Dollar could allow gold’s price to rise further. On the flip side, high yields tend to weigh on gold’s price as safe haven investments could be shifted towards the bond market. 

Other highlights for today

Today we get Germany’s final HICP rates for August, Sweden’s GDP rates for July, Norway’s and Turkey’s CPI rates for August, the weekly US initial jobless claims figure, August’s US PPI rates, the US existing home sales for August and the weekly US EIA crude oil inventories figure. In tomorrow’s Asian session, we get Japan’s PPI rates for August.

Charts to keep an eye out

EUR/USD continued to edge higher, yet remains well within the boundaries set by the 1.1685 (R1) resistance line and the 1.1575 (S1) support level. The RSI indicator remains above the reading of 50, which may imply a bullish predisposition of the market for the pair. We maintain a bias for the sideways motion to continue and intend to keep it as long as the pair respects the prementioned levels. Should the bulls take over, we may see EUR/USD breaking the 1.1685 (R1) resistance line and continue higher aiming for the 1.1825 (R2) resistance level. Should the bears be in charge, we may see EUR/USD breaking the 1.1575 (S1) support line and start aiming for the 1.1470 (S2) support level.

WTI’s price rose yesterday breaking the 93.30 (R1) resistance line yet corrected lower in today’s Asian session. We intend to remain bullish for the commodity’s price action as long as the upward trendline guiding it remains intact. Should the bulls remain in charge, we may see WTI’s price breaking clearly this time the 93.30 (R1) resistance line and start aiming for the 98.50 (R2) resistance level. Should the bears take over, we may see WTI’s price breaking initially the prementioned upward trendline, signalling an interruption of the upward movement continue to break also the 88.60 (S1) support line.

Chart

EUR/USD daily chart

Chart
  • Support: 1.1575 (S1), 1.1470 (S2), 1.1350 (S3).
  • Resistance: 1.1685 (R1), 1.1825 (R2), 1.1925 (R3). 

WTI cash daily chart

Chart
  • Support: 88.60 (S1), 82.00 (S2), 76.60 (S3).
  • Resistance: 93.30 (R1), 98.50 (R2), 103.65 (R3). 

Author

Peter Iosif, ACA, MBA

Mr. Iosif joined IronFX in 2017 as part of the sales force. His high level of competence and expertise enabled him to climb up the company ladder quickly and move to the IronFX Strategy team as a Research Analyst. Mr.

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