EUR/USD, Oil Forecast: Two trades to watch

EUR/USD falls ahead of US GDP & EZ consumer confidence data

• Eurozone consumer confidence is expected to rise to -15.5 from -16.1
• US Q4 GDP is forecast at 3.3% in Q4 vs 4.9% in Q3
• EUR/USD tests 200 SMA support

EUR/USD is under pressure amid U.S. dollar strength as investors shrugged off weaker-than-forecast US data yesterday and looked ahead to inflation figures from both the Eurozone and the US later in the week.

While eurozone inflation is expected to cool to 2.5% YoY, there are concerns that US inflation could prove to be sticky, which would support the Fed's view that it's too soon to start cutting interest rates.

Prior to inflation data, today, the focus will be on US Q4 GDP data, which is expected to confirm the preliminary reading of 2.3% annualized in Q4, down slightly from 4.9% in Q3. While growth is expected to soften, it's still significantly stronger than growth in the eurozone.

The data comes after durable goods in the US fell by more than expected, and U.S. consumer confidence also unexpectedly deteriorated after three months of gains amid rising concerns over the health of the US labor market.

Meanwhile, the euro has come under pressure ahead of eurozone consumer confidence figures, which are expected to show a slight improvement, rising to -15.5, up from -16.6. But this is still around historically low levels amid concerns over a gloomy economic outlook and still elevated inflation.

The date comes after German consumer confidence slightly improved yesterday as income expectations rose to a two-year high. Still, French consumers remained concerned over the standard of living.

EUR/USD forecast – technical outlook

After rising from the multi-week falling channel, EUR/USD still struggles around the 200 SMA at 1.0825. The price is testing the 200 SMA and the 100 SMA support. Sellers will look for a break below here to extend losses towards the 1.08 round number and 1.07, the February low.

Should buyers successfully defend the 200 SMA, a rise above 1.0865, the weekly high could open the door to 1.09, the February high.

Oil edges lower ahead of EIA stockpile data

• OPEC+ could extend output cuts
• High rates for longer hurts the demand outlook
• EIA stockpile data comes after a large build in API inventories
• Oil trades in a rising channel

After gains in the previous session oil prices are pulling back slightly on Wednesday as the prospect of a delay in US rate cuts and a rise in US crude stockpiles offset news that OPEC+ might extend its output cuts.

Yesterday, oil prices rose after reports that OPEC+ will consider extending voluntary oil production cuts into the second quarter of 2024. Last November, OPEC agreed to voluntary reductions of 2.2 million barrels per day for Q1 of this year, led by Saudi Arabia. Extending these voluntary cuts would likely tighten the oil market.

Concerns about demand are offsetting the prospect of tighter supply. On Tuesday, Federal Reserve governor Michelle Bowman signaled that she was in no rush to cut US interest rates, echoing similar views from her colleagues. High-interest rates for longer could dent the demand outlook in the US as grace schools.

Meanwhile, US crude stockpiles rose by 8.43 million barrels in the week ending February 23, according to the API report on Tuesday, which was ahead of expectations. EIA stockpile data is due later today.

Oil forecast – technical analysis

Oil continues to trade within a rising channel, pushing above its 200 SMA. Buyers will look to move above resistance at 80.00, the psychological level, and the 2024 high. A rise above here opens the door to 82.00, the round number and upper band of the rising channel.

On the flip side, support can be seen at 77.65, the 200 SMA. A break below here could see sellers gaining momentum towards 77.50, the weekly low and last week’s low.