EUR/USD rises to a 2024 high.
The US dollar has fallen to a 7.5-month low against its major peers at the start of the new week as the markets bet that Federal Reserve chair Jerome Powell will provide signals about cutting interest rates in a speech later this week.
Fed chair Jerome Powell will speak at the Jackson Hole symposium on Friday, where he is expected to confirm that interest rates are coming down. From here, the debate is likely to shift away from the “will they won't they” to “how big will the Fed go?”
The FOMC minutes will be released on Wednesday, prior to Jerome Powell’s speech on Friday, and could provide more clues about the Fed’s outlook for rates.
Data last week showed the US inflation cooled in line with expectations to 2.9%, its lowest level in three years. Meanwhile, the euro is pushing higher, reaching a fresh year-to-date high and improving market sentiment.
Last week's data from the eurozone was mixed after the ZEW economic sentiment fell in both Germany and the broader eurozone region. However, the euro area GDP confirmed modest growth of 0.3%. The minutes of the ECB meeting will be released this week and could provide further clues on the pace at which the ECB is planning to cut rates after slashing rates by 25 basis points in June.
The euro remains strong as markets anticipate the ECB will gradually reduce interest rates without pre-committing to a particular rate path.
EUR/USD forecast: technical analysis
EUR/USD has risen above 1.10 and out of its ascending channel towards a 2024 high. Supported by the RSI above 50 and the 50 SMA crossing above the 200 SMA in a golden cross formation, buyers will look to extend gains towards 1.11, the round number, and 1.1140, the December 2023 high.
On the other hand, support can be seen at 1.10, the psychological level, and 1.0970, the rising trendline support.
Oil falls amid China demand concerns.
- China customs data showed diesel & gasoline exports fell in July
- US Secretary of State Anthony Blinken flew to Israel to push for a ceasefire
- Oil falls below the 200 SMA & 77.00 support.
Oil prices are falling on Monday amid concerns over weak demand in China, progress in ceasefire talks in the Middle East, and the approaching end of peak US driving season.
Persistent concerns about demand in China, the world's largest oil importer, have led to a selloff in oil prices. Customs data over the weekend showed that China's diesel and gasoline exports fell sharply in July amid lower crude processing levels due to weak profit margins.
Last week, data showed that the Chinese economy lost momentum in July as new home prices fell at the fastest pace in nine years, and industrial output slowed. Separately, US Secretary of State Anthony Blinken arrived in Tel Aviv this weekend to advocate for a ceasefire in Gaza, which could reduce oil supply risks.
Markets will be watching closely for developments. So far, Qatar, the US, and Egypt have failed to narrow the differences between the two sides for an agreement to be reached in Gaza. Violence continued on Sunday.
Oil forecast: technical analysis
Oil ran into resistance at 80.00, the 100 SMA and psychological level, falling below the 200 SMA and support at 77.00. This, combined with the RSI below 50, keeps sellers hopeful of further losses. Support can be seen at 74.50, the weekly low. Below here, support is at the 71.70-72.50 zone, the August and June lows. On the upside, buyers would need to retake 77.00 and the 200 SMA at 78.00 to stage a recovery towards 80.00.
