EUR/USD, Oil Forecast: Two trades to watch

EUR/USD falls ahead of ECB’s Lagarde & US jobless claims

EC downwardly revised eurozone growth forecasts for 2023/4
US jobless claims are expected to rise to 220k
EUR/USD consolidates around 1.0850

EUR/USD is falling for a second straight day on USD strength and as investors look ahead to US data along with a speech by ECB president Christine Lagarde.

Comments by ECB president Lagarde will be watched closely. Previously, Lagarde has indicated that the central bank would not begin considering rate cuts for the coming two quarters. Investors will be keen to see whether her view has changed after the European Commission downwardly revised growth forecasts for the eurozone for 2023 and 2024.

Meanwhile, the USD recovered from a 2.5-month low after stronger-than-expected retail sales data yesterday highlighted the resilience of US consumers despite the Fed's aggressive rate hikes. The data has raised questions over whether the Fed will start cutting rates in June next year. The market may have gotten carried away with itself following weaker-than-expected CPI data and an unexpected monthly fall in PPI data.

Attention turns to US jobless claims, which will provide further clues about the health of US economy.

Jobless claims are expected to tick higher to 220K, up from 217K in the previous week. However, continuous claims could provide more insight and are expected to rise for an eighth straight week to 1847K, up from 1834K.

Persistently rising jobless claims suggest that Americans who are unemployed are finding it harder to find a job. Weakness in the labour market would support a more dovish stance from the Federal Reserve and could fuel bets of a dovish pivot from the Fed.

US industrial production is also due to be released and is expected to show a slight weakening of 0.3% MoM in October after rising 0.3% in September.

Several fed speakers, including Fed Williams Waller and Mester also expected to speak. Their comments will be watched for any clues over the outlook for the US economy, inflation and the future path of interest rates.

EUR/USD outlook – technical analysis

EUR/USD broke out of the rising channel, pushing above the 200 SMA before running into resistance at 1.0890.

The price is consolidating around 1.0850, showing positive signs with the RSI above 50.

Buyers will look for a rise above 1.0890 to bring 1.0940 (the August 31 high) ahead of 1.10.

On the downside, support is at 1.08, the confluence of the 200 sma and the rising trendline support. A break below here brings 1.0660, the weekly low into play.

Oil falls for a third straight day

US inventories rose 3.6 M vs 1.8M forecast
Chinese data disappoints raising concerns over the demand outlook
Oil failed to close above the 200 SMA

Oil is heading lower for a third straight day as concerns of record high U.S. oil output combine with concerns over demand from China, pulling the price lower.

Data showed that China's oil refinery throughput cooled in October compared to the previous month. China housing data was also weaker than expected, falling for a fourth straight month and raising concerns over the outlook for the Chinese economy. Although industrial production and retail sales earlier this week were stronger than expected.

Yesterday, the Energy Information Administration reported that inventories of US crude oil rose by 3.6 million barrels in the week ending November the 10. This was well ahead of the 1.8 million barrels that was expected.

The larger-than-expected increase in inventories offset recent optimism surrounding the demand outlook for crude oil after OPEC and the IEA provided upbeat demand outlooks earlier in the week.

The rebound in the US dollar is also adding pressure to oil prices. The US dollar has risen from a 2 1/2 month low after data on Wednesday showed US producer prices slowed more than expected in October, but US retail sales were stronger than forecast. The stronger dollar makes oil more expensive for buyers with foreign currencies.

Oil forecast – technical analysis

Oil failed to close above the 200 sma and has rebounded lower. Sellers will look to take out support at 74.54 the November low to extend losses towards 72.50 ahead of 70.00 the psychological level.

Any recovery needs to rise above the 200 sma at 78.00 and take out the weekly high, just below 80.00 to create a higher high and bring 83.30 the November high into focus.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.