The USD strengthened against a number of its counterparts yesterday, while on the contrary the EUR lost steam and retreated. The EU is about to discuss the replacement of major EU officials, such as the replacement of the EU Commission President Juncker, ECB President Mario Draghi and EU Council President Tusk. Also, the evident polarization of the EU Parliament after the elections did not help the common currency. Media reported that EU officials were mentioning that the EU Commission is likely to take disciplinary actions against Italy on June 5th, and probably we could be having a repetition of the Italian drama last year. We expect fundamentally both news to weigh on the EUR, however the currency could also be data driven in the near future and should there be soft data released about the EUR we could see it weaken. EUR/USD dropped yesterday, aiming for the 1.1175 (S1) support line. We could see the pair maintaining that direction today as fundamentals and financial releases today are expected to favor its short positions. Should the bears maintain control over the pair’s direction, we could see it breaking the 1.1175 (S1) support line and aim for lower grounds. Should the bulls take over, we could see the pair rising and aiming for the 1.1220 (R1) resistance line.
Oil prices pushed from OPEC cuts and sanction worries
Oil prices rose and stabilized yesterday as worries about supply cuts by OPEC and US sanctions against Iran and Venezuela fueled the commodity’s prices higher. Supply cuts by OPEC have been driving oil prices up since the beginning of the year and the markets seem to be expecting further developments. It should be noted that OPEC +Russia are to meet on June 25th and 26th to discuss the way forward with production cuts. Analysts note that supply side issues seem to be more prominent but at the same time mention that the rise of oil prices currently seems fragile. We expect fundamentals to drive oil prices and should there be further headlines about production cuts, we could see oil prices rising further. Oil prices rose yesterday, testing and currently have broken the 59.10 (S1) resistance line (now turned to support). Should the commodity’s prices distance themselves for the prementioned support line even further the road opens for the 60.50 (R1) resistance line. Should the pair come under the selling interest of the markets, we could see it breaking below the 59.10 (S1) support line once again, aiming for the 57.75 (S2) support barrier.
Other economic highlights, today and early tomorrow
Today during the European session, we get Germany’s Gfk Consumer Sentiment for June along with Eurozone’s business and industrial climate indicators for May. In the American session, we get the US consumer confidence indicator for May. As for speakers, please note that BoJ’s Governor Kuroda and RBNZ Governor Orr are scheduled to speak on Tuesday morning.
WTI H4
Support: 59.10 (S1), 57.75 (S2), 56.00 (S3)
Resistance: 60.50 (R1), 62.00 (R2), 63.70 (R3)
EUR/USD H4
Support: 1.1175 (S1), 1.1125 (S2), 1.1075 (S3)
Resistance: 1.1300 (R1), 1.1260 (R2), 1.1220 (R3)
