Two trades to watch: EUR/USD, Oil

EUR/USD rises above 1.04 ahead of ECB minutes and German IFO business sentiment data

The EUR/USD is pushing higher, extending gains from yesterday. The less hawkish Fed minutes and weaker-than-forecast US business activity data is dragging on the USD.  The US is closed today for the Thanksgiving public holiday, so volumes could be thin.

Meanwhile, the upbeat market mood and not as bad as feared eurozone PMI data is helping the EUR gain ground. The eurozone composite PMI unexpectedly rose to 47.8, up from 47.3. This could indicate that a recession in the eurozone could be shallower than initially feared

Today attention shifts to German IFO business sentiment, which is expected to rise to 85, up from 84.5.

The minutes of the latest ECB meeting are also due to be released and could provide further insight as to whether the ECB is considering a downshift in the pace of rate hikes to 50 basis points in December. Recent ECB speakers have been mixed in their views.

Where next for EUR/USD?

After rising to a high of 1.0448 in early trade, the EUR/USD is heading, easing back, testing the 200 sma at 1.04. The RSI supports further upside while it remains out of overbought territory.

Buyers need to rise above 1.0480  to create a higher high and extend the bullish trend towards 1.06, the late June high.

Sellers will look for a break below the 200 sma to open the door to 1.0220, the weekly low, and 1.02, the September high. A break below 1.0100 could negate the near-term uptrend.

Oil steadies after a steep fall.

Oil prices are treading water after falling sharply in the previous session. Oil recorded its biggest daily decline in two months as the G7 group weighed up, capping Russian oil prices at $65-$75 per barrel.

The group will continue discussions today surrounding the level of the oil price cap. Weak US PMI data and rising COVID infections in China, the world’s largest oil importer, add to the oil’s weakening demand outlook.

EIA data showed that US gasoline stockpiles increased by more than forecast, pointing to a slowdown in demand.

Today the oil markets could be quiet owing to the US Thanksgiving Holiday. A weaker USD after the minutes from the latest Fed meeting is helping to prop up the price.

Where next for oil prices?

Oil trades below its falling trend line dating back to the start of November. The RSI is in bearish territory, and the 50 sma on the 4-hour chart has crossed below the 50 sma in a death cross signal.

Sellers will look to break below 75.27, the weekly low, to create a lower low and head towards 74.10, the 2022 low. Beyond here 70.00, the psychological level comes into play.

On the upside, a rise above 82.30, the 50 sma, the weekly high, and the falling trendline resistance could be significant. A rise above here exposes the 200 sma at 85.80.