OIL PRICES REMAIN HIGHLY VOLATILE
Volatility of EUR/USD decreased amid the absence of important news today and the expectation of Janet Yellen’s statements in Congress on Wednesday and Thursday during the semi-annual report of the Fed. Investors will be on the look out for hints about the possibility of another interest rate increase this year. Among the news that led to modest positivity for the EUR/USD is the Italian industrial production growth in May by 0.7% that was 0.2% better than expected. At the same time, NFIB small business index in the US decreased to 103.6 in June compared to 104.5 in May. Today at 16:30 GMT FOMC member Brainard will deliver a speech which may also impact the course of trading.
The Japanese yen is falling against the US dollar despite the positive preliminary report on machine tool orders that in June saw accelerated growth to 31.1% compared to 24.5% in May. Appetite for risk assets and appreciation of the greenback will keep supporting the USD/JPY quotes.
The volatility of oil is still high due to speculation about the invitation to Libya and Nigeria to join other OPEC members and Russia at the meeting in St. Petersburg where oil production cuts will be discussed. We should recall that both countries increased output and currently they are not obliged to reduce production volumes. Potential of increase is still limited due to the supply glut on the market and rising drilling activity in the US. After the end of the current consolidation within the wide range, we expect strong moves in either direction. The trigger for it may be tomorrow’s report on crude oil inventories in the US.
The EUR/USD price after a number of unsuccessful attempts to break through the support line at 1.1380, resumed growth and may hit key resistance at 1.1450, and its overcoming may become the signal to buy with potential targets at 1.1500 and 1.1620. On the other hand, breaking through 1.1380 may lead to a further decline to 1.1300 and the angled support line.
The USD/JPY price was able to fix above the important mark of 114.00 and keeps moving along the upper boundary of the rising channel. The closest targets within the current positive trend are at 114.70 and 115.35. In a case of decline, the quotes may return to the bottom line of the channel and the support at 113.00, but at first, USD/JPY needs to break through 114.00. The MACD signal line is close to the 0 mark and its intersection may become an additional stimulus for a descending correction.
The WTI quotes reached the upper limit of the 43.70-44.70 range, which they have been moving within during the last trading sessions. In the case of overcoming 44.70 and breaking through the upper boundary of the local descending channel, we may see continued increase up to 46.00 and 47.00. The RSI on the 15-minute chart is close to the overbought zone and that points to a possible descending correction. In this case, the immediate goals will be located at 43.70 and 43.00.