ECB expected to remain on hold today

ECB expected to remain on hold, but may sound hawkish

The ECB is about to release its interest rate decision and is widely expected to remain on hold. EUR OIS imply a possibility of 82% for such a scenario to materialise yet also implies that the market prices in a rate hike in September. Hence, should the bank signal hawkish tendencies leading to a rate hike verifying market expectations we may see the EUR getting some support, while a failure of the bank to sound hawkish may disappoint traders, forcing the market to reposition itself, selling the common currency.

US stock markets edge lower

Major US equity market indexes edged lower yesterday. Earnings reports tended to be somewhat worrisome, with Google’s Alphabet signalling increased capital spending intensifying market worries for its negative cashflows, while IBM was in the reds both on an EPS and revenue level . Intel reports today and positive figures with a robust forward guidance could support its share, with market’s focus being on the AI sector.

Oil prices rise for a third day

Oil prices continued to rise, as market worries  for the Middle East and international oil supply routes continued to intensify. The risk of oil supply disruption now is being faced both at the Straits of Hormuz and the Red Sea’s Bab el-Mandeb simultaneously. Should we see market worries intensifying further we may see oil prices getting further support and vice versa.

Gold edges higher yet the bulls remain unconvincing

Gold’s price edged higher yesterday, yet corrected lower during today’s Asian session weakening the case of the bulls. Gold’s fundamentals continue to include tensions in the Middle East and the possibility that the conflict may enhance inflationary pressures in the US economy, a scenario that could weigh on gold’s price. The highlight is expected to be the Fed’s meeting next week. 

Other highlights for today

Today we get France’s Business climate, the UK’s CBI industrial orders and Canadas’ business barometer, all for July, on a monetary level we note the release from Turkey of CBT’s interest rate decision and  later on we get the weekly US initial jobless claims figure, Canada’s retail sales for May and Euro Zone’s preliminary Consumer Confidence of July. In tomorrow’s Asian session, we get Australia’s and Japan’s preliminary PMI figures for July and Japan’s June CPI rates.  

Charts to keep an eye out

EUR/USD’s price action remains confined within the boundaries set by the 1.1470 (R1) resistance line and the 1.1350 (S1) support level. We maintain a bias for the sideways motion to continue on a technical level, given also that the RSI indicator tends to imply a rather indecisive market, yet note that he on a fundamental level ECB’s interest rate decision could alter the pairs’ direction. Should the bulls be in charge, we may see EUR/USD breaking the 1.1470 (R1) resistance line and start aiming for the 1.1575 (R2) base. Should the bears take over, we may see EUR/USD breaking the 1.1350 (S1) line and start aiming for the 1.1210 (S2) level.

WTI’s price continued to rise and is currently teasing the 88.60 (R1) resistance line. We intend to maintain yesterday’s bullish outlook for the commodity’s price as long as the upward trendline guiding it remains intact. The rise of the RSI indicator implies an intensification of the bullish market sentiment, supporting our outlook. Yet the commodity’s price action is flirting with the upper Bollinger band, which may slow down oil bulls or even cause a correction lower. Should the bulls maintain control, WTI may break the 88.60 (R1) line and start aiming for the 93.30 (R2) level. Should the bears take over, WTI may break the prementioned upward trendline, the 82.00 (S1) line, and continue lower aiming for the 76.60 (S2) level.

EUR/USD daily chart

• Support: 1.1350 (S1), 1.1210 (S2), 1.1065 (S3).
• Resistance: 1.1470 (R1), 1.1575 (R2), 1.1685 (R3). 

WTI daily chart

• Support: 82.00 (S1), 76.60 (S2), 71.85 (S3).
• Resistance: 88.60 (R1), 93.30 (R2), 98.50 (R3).