Two Trades to Watch: EUR/USD Tests Channel Resistance, Oil Awaits OPEC Report

Markets are holding their breath today. EUR/USD is consolidating below a key resistance level ahead of crucial Fed commentary, while Oil prices have stalled as traders brace for the OPEC report and clarity on global supply. We break down the technical setup and fundamental risks for both major assets.

Today’s session is defined by anticipation. With the US government shutdown potentially ending today via a House vote, and a drought of economic data, the focus is squarely on central bank guidance and major supply reports. For active traders, this period of consolidation often precedes sharp breakouts.

Trade 1: EUR/USD – The Breakout Wait

The EUR/USD pair is consolidating just below 1.16, having hit a two-week high following a strong close yesterday. The market is reacting to recent labour market concerns in the US, which are boosting hopes for Federal Reserve rate cuts.

Fundamental Focus:

• US Labour Weakness: Data showing private employers shed an average of 11,250 jobs per week recently, coupled with 153,000 job cuts in October (a two-decade high for the month), has policymakers acknowledging a worsening outlook. This significantly revives rate cut expectations, weakening the USD.
• Eurozone Resilience: German inflation confirmed CPI rose 2.3% YoY, and wholesale inflation beat forecasts at 0.3% MoM. With the ECB holding steady, these figures offer support to the Euro.
• Political Risk: The upcoming House vote on the spending bill to end the government shutdown is a key event. A successful vote could lift general risk flows, which would offer further support to the EUR/USD pair.

Technical Forecast (EUR/USD):

The price is currently trading at 1.1580, testing the upper band of a falling channel that dates back to mid-September. This is a critical breakout point.

• Bullish Breakout: A successful rise above the channel resistance exposes the 50 SMA at 1.1670, bringing 1.17 and potentially 1.1780 into focus.
• Downtrend Continuation: Failure to break out keeps the downtrend intact. Support is seen at 1.1540, with a break below the recent low of 1.1470 needed to create a lower low and shift attention toward 1.14.

Stay informed on all market developments by consulting our economic calendar.

Trade 2: Oil – Supply Glut vs. Geopolitical Risk

Oil prices have slipped below $61.00 a barrel, halting a recent three-day rally, as the market anticipates crucial reports that will clarify the global supply outlook.

Fundamental Focus:

• Oversupply Worries: The market remains troubled by concerns of a supply glut as OPEC+ has increased output and the US sees record production.
• Key Reports: Traders are squarely focused on OPEC’s monthly market report and the IEA’s annual energy assessment later today, which will provide vital projections for next year and either confirm or ease oversupply fears.
• Geopolitical Support: Sanctions on Russia are beginning to disrupt crude markets (e.g., Lukoil force majeure in Iraq). This, coupled with plans by Saudi Arabia, Iraq, and Kuwait to increase shipments to India as refiners seek alternatives, is lending some structural support, countering the demand slump fears.

Technical Forecast (Oil):

Oil is attempting a recovery from last month’s $56.00 low and is currently testing resistance around 61.50 within what could be a bull flag pattern.

• Bullish Breakout: Buyers need a convincing close above 61.50 to extend gains toward 62.50. A move above this level would create a higher high and expose the 200 SMA at 64.75.
• Bearish Invalidation: Failure to retake 61.50 could see the price test support at 60.00. A fall below 58.40 invalidates the bull flag pattern and brings the $56.00 low back into focus.

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