Bulls push Oil prices higher

JPY bulls in a china shop

JPY continued to strengthen yesterday and during today’s Asian session, discouraging even further carry traders shorting the Japanese currency. US Treasury Secretary Bessent was quite intense calling on  traders selling the Yen to bet against him. Analysts mention the possibility that carry traders may switch from shorting the Yen to shorting CHF, which could lead to side effects in the FX market from the US-Japanese market intervention operations.

Oil prices continue to rise

Oil prices continued to rise yesterday, as tensions in the Middle East remain high. In a latest development, the US is reported to have struck and sunk five Iranian oil tankers while Iran hit a US airbase in Jordan and reported strikes on ten ships. Tensions have escalated sharply which in turn may enhance market worries for the supply chains of the international oil market. Should we see further escalation in the US-Iran conflict, we may see oil prices being pushed even higher. 

US equities remain cautious

US equities remained mixed yesterday, as the market re-opened after the US Labour day on Monday. Dow Jones had considerable losses, while Nasdaq remained stable. On a fundamental level, the prospect of higher oil prices given the ongoing US-Iran conflict tends to keep US stock market participants cautious, with a risk-off attitude. Should we see an escalation of tensions we expect US equities to retreat further. 

Gold remains stable

Gold’s price remained relatively stable yesterday and during today’s Asian session. The negative correlation of the USD with gold’s price seems to be still active yet somewhat blurred given the recent inactivity on both fronts. We continue to highlight the Fed’s intentions as the main driver for gold’s price and a possible weakening of the USD may allow gold’s price to rise. 

Other highlights for today

Today we get France’s industrial output for July, and the weekly US API crude oil inventories figure, while ECB President Christine Lagarde is scheduled to speak. In tomorrow’s Asian session, BoJ Policy Board Member Masu speaks and a possibly hawkish tone may prop up the Yen further.

Charts to keep an eye out

USD/JPY continued to fall, yesterday and during today’s Asian session, aiming for the 152.10 (R1) support line. The RSI indicator remains below the reading of 30 and is still falling, highlighting the intensification of the allready strong bearish market sentiment for the pair, yet at the same time also implies that the pair is at oversold levels and possibly ripe for a correction higher allowing us to maintain yesterday’s bearish outlook. Should the bears remain in control over USD/JPY, we may see the pair breaking the 152.10 (S1) support line and start aiming for the 149.40 (S2) support level. Should the bulls take over, we may see USD/JPY breaking the 155.00 (R1) resistance line and continue to break also the 157.50 (R2) resistance level.

Brent’s price continued to rise aiming for the 101.10 (R1) resistance level. We intend to remain bullish for the commodity’s price action as long as the upward trendline guiding it remains intact. Also the RSI indicator is rising, nearing the reading of 70, implying a strengthening bullish market sentiment for Brents’ price. Yet the fact that the commodity’s price action has reached the upper Bollinger band, may slow down the bulls. Should the bulls remain in charge, we may see Brent’s price breaking the 101.10 (R1) resistance line and start aiming for the 103.30 (R2) resistance level. Should the bears take over, we may see Brents’ price breaking the 82.60 (S1) support line, break also the upward trendline, aiming for the 84.40 (S2) level.

Calendar follows

USD/JPY daily chart

• Support: 152.10 (S1), 149.40 (S2), 146.50 (S3).
• Resistance: 155.00 (R1), 157.50 (R2), 160.50 (R3).

Brent Cash daily chart

• Support: 92.60 (S1), 84.40 (S2), 77.60 (S3).
• Resistance: 101.10 (R1), 113.30 (R2), 120.30 (R3).