OIL QUOTES SURGE ON NEWS FROM THE MIDDLE EAST

The price of the single currency today barely reacted to the news from the elections in Lower Saxony in Germany where Angela Merkel’s party lost to the Social Democrat’s (SPD). At the same time, tensions linked to the Catalan crisis eased and investors’ attention turned to macro data releases in the US and Eurozone. Support for the euro followed the release of the Eurozone’s trade balance which saw a surplus of 21.6 billion euro in August, surpassing the 20.3 billion euro expected. Exports grew by 2.5% and imports expanded by only 0.4% in the last month of the summer. The USD got a boost today from the unexpectedly strong increase in the Empire State manufacturing index that reached 30.2 in October against 20.3 forecasted.

The USD/JPY is consolidating after declining in the previous trading sessions due to the weakening of the US dollar. Today the Japanese yen was impacted by the release of industrial production data in Japan that showed 2.0% growth in August, which was 0.1% less than expected.

One of the major topics today was the increase of oil prices due to the possibility of the renewal of sanctions against Iran by the US. Congress has a 60-day period in which to make a decision on this issue. At the same time, Kurdish and Iraqi forces clashed in the city of Kirkuk which is located in the oil producing region. Tensions in Iraq are likely to rise over the referendum on Kurdish independence that was held in September where the majority voted in favour of sovereignty from Baghdad. These factors form a strong basis for continued oil price increases.

EUR/USD

The EUR/USD price keeps moving within the limits of the local descending channel and in case of continuing the current impulse, the next target will be at the 1.1750 level. Breaking through this level will become the basis for further price drops to 1.1700 and 1.1620. In order to resume growth with potential targets at 1.1925 and 1.2000, quotes need to break through 1.1825.

USD/JPY

The USD/JPY quotes are testing an important support level at 111.70 and breaking through it may become the basis for continued price drops with immediate goals at 110.30 and 109.60. The MACD signal line on the 15-minute chart just crossed the zero level which points to the possible price growth with the closest objectives at 112.30 and 113.00.

USD/WTI

The WTI quotes demonstrated a confident upward impulse which broke through the resistance at 51.65. After a long period of growth, we do not exclude a rollback to 51.65 and the SMA100 on the 15-minute chart. The next targets should the positive momentum continue will be 52.80 and 54.00. Volatility is likely to remain high due to tensions in the Middle East.