EUR/USD, Oil Forecast: Two trades to watch

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Fiona Cincotta
By :  ,  Senior Market Analyst

EUR/USD rises ahead of PMI data 

  • Eurozone Composite PMI data is expected at 46.9 vs 46.5 in October 
  • USD could see low volume due to the Thanksgiving holiday 
  • EUR/USD bullish above the 200 sma 

EUR/USD is pushing higher after two days of losses amid USD weakness and ahead of eurozone PMI data 

EUR/USD slipped 0.2% on Wednesday as investors digested the ECB's financial stability report, and after stronger-than-expected US labour market and consumer sentiment data, that left the pair in negative territory. 

Attention is turning to eurozone PMI data, which is expected to show that both the services and manufacturing sector contracted at a slightly slower pace in November. 

Expectations for the services PMI to increase to 48.1 from 47.8 in October, and the manufacturing PMI is expected to tick slightly higher to 43.4, up from 43.1. As a result, the composite PMI, which is considered a good gauge of business activity, is set to rise from 40 to 46.9 from 46.5. The level 50 separates expansion from contraction. While this is still deep in contraction, it does suggest that maybe a bottom has been reached. 

As well as the headline figures, subcomponents such as prices paid, employment, and new orders will also be in focus. Falling prices could take pressure off the ECB to keep interest rates high for longer. 

The data comes after eurozone consumer confidence figures yesterday showed that sentiment ticked higher in November, rising to -16.9, up from -17.8. This was better than expected, although sentiment remains well below its long-term average owing to the high cost of living keeping shoppers squeezed. 

The US dollar is falling after two days of gains as investors continue to weigh up when the Federal Reserve might start to cut interest rates. The greenback found support yesterday from stronger-than-expected U.S. jobless claims data and more hawkish-than-expected minutes from the Federal Reserve meeting. 

U.S. dollar could see low volumes today owing to the Thanksgiving bank holiday. 

EUR/USD forecast – technical analysis 

After rising aggressively out of the rising channel and above the 200 SMA, the price hit a high of 1.0965. EUR/USD has eased back and is consolidating above 1.09. The RSI supports further upside. 

Buyers will look to rise above 1.0965 to extend the bullish run. Above here 1.10 the psychological level is in focus. 

Meanwhile, support can be seen at 1.0850 the weekly low but sellers need to break below the 200 SMA at 1.0810 to gain momentum towards 1.0750 the 20 sma and November 3 high. 

eur/usd forecast chart

Oil falls further on OPEC worries 

  • OPEC+ delayed the meeting to November 30 
  • No explanation was given, unnerving the market 
  • Oil faced rejection at 200 sma 

Oil prices are falling for a second straight day after OPEC+ delayed the upcoming meeting without explanation. The oil cartel group has pushed the meeting, which was going to be on the 25th and 26th of November, back to November 30th. The lack of explanation has raised uncertainty over how much further the group intends to cut output. 

The delay was reportedly due to disagreements over output between member countries and linked to African producers who actually make up a small portion of the group.  

Production changes by Saudi Arabia and Russia tend to be watched much more closely. These are the two that have led to the cartel cutting output across this year. Saudi Arabia and Russia have also recently signaled that they intend to maintain the supply cuts until the end of this year.  

However, recent data suggest that despite these ongoing cuts by Saudi Arabia and Russia, global oil markets are not as tight as initially expected. Non-OPEC production is at a record high, demand appears to be cooling, and US inventory data showed a larger-than-expected build over the past week. Gasoline inventories also showed us a bigger build. 

On the demand side, slowing economic growth is weighing on the oil demand outlook. Attention is particularly on China amid concerns over whether demand will remain steady there in the coming months. 

Oil forecast – technical analysis 

Oil failed to push above the 200 sma, which combined with the RSI below 50 keeps sellers hopeful of further downside.  

Support can be seen at 73.80, yesterday’s swing low. A break below here opens the door to 72.40 the November low. 

Buyers, could be encouraged by the long lower wick on yesterday’s candle, suggesting that selling appetite was weak at the lower levels. Buyers need to rise above 78.00, the confluence of the 200 sma and yesterday’s high to extend gains towards 80.00. last week’s high and the psychological level. 




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