Summary:
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EURUSD broke below the 1.1300 handle
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Potential inverse head and shoulders pattern seen on the S&P 500 (US500) chart
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Oil (OIL) trades at multi-month lows
The European currency broke to new multi-month lows yesterday against the US dollar. Unresolved issue concerning the Italian budget as well as Fed’s hawkish tone resulted in another downward impulse on EURUSD market. The pair found itself below the 1.1300 handle, the support level that fend off bears in mid-August. The Italian government has time until midnight to submit revamped budget draft but any major deviations from the original draft do not seem probable. Maintaining bold stance towards the European Commission may lead to escalation of the Rome-Brussels conflict and therefore may result in another sell-off of the European shares and common currency.
Source: xStation5
Another market that has been interesting recently is, of course, Wall Street. After reaching local highs from mid-October the S&P 500 (US500) pulled back to the 200-session moving average. Volatility in the past couple of weeks was impressive and the potential inverse head and shoulders pattern with a neckline around 2820 pts was painted. If the range of the pattern is to be realized with new developments in Beijing-Washington spat serving as catalyst an upward movement towards the all-time-highs may be on cards. The G20 summit scheduled at the turn of November and December could be a turning point but one should be aware that Wall Street is particularly focused on its own, domestic problems. Namely, in the upcoming weeks earnings estimates for the final quarter of the year will take the spotlight. It is especially important as the fourth quarter of 2018 will be the last one with prior year’s base not being affected by the tax overhaul.
Source: xStation5
Last but not least, we will take a look at oil as it experienced significant selling pressure in the past few weeks. Concerns over the global economic slowdown that would lead to smaller demand for oil took their toll. However, the main factor that was steering oil prices recently were sanctions imposed on Iran. The drop in production turned out to be smaller than expected what combined with waivers granted to 8 countries pushed prices lower. The US President Donald Trump said yesterday that oil prices should be much lower given current global output and production increase in Saudi Arabia. Remarks triggered another selling on the oil market and in turn Brent (OIL) is trading below the psychological $70 barrier. The next support level in line could be the 50% Fibo level of the upward impulse started in mid-2017 ($65.5). From the fundamental point of view increased volatility may surface on Thursday when DOE report will be published.
Source: xStation5
