The markets are buzzing as a much-anticipated EU-US trade deal appears to be nearly finalized, signaling a potential shift in global economic sentiment.
Deal Details Emerge, Oil Prices React
A tentative EU-US trade agreement has market participants watching closely, especially oil traders.
- A near-finalized EU-US trade deal is boosting market sentiment.
- The U.S. dollar shows strength against the Euro following the news.
- Equities are mixed, with some sectors seeing sell-offs.
- U.S. oil prices are experiencing sharp buying pressure despite trading within a range.
While the specifics of the EU-US trade deal are still being ironed out, the general understanding among market participants is that an agreement is all but secured. This news has injected a notable wave of optimism into the markets.
What is the key takeaway from the latest trade deal news? The nearly finalized EU-US trade deal is expected to have a significant impact on market sentiment and specific commodities like oil.
The U.S. dollar is showing renewed strength, particularly against the Euro. This uptick follows a pattern that analysts are describing as a “double-top,” a technical indicator that often precedes further upward movement. It will be interesting to observe how the markets continue to price in this development.
Equities, however, are presenting a more mixed picture. Some sectors have seen a sell-off in the wake of the trade deal announcement, suggesting a nuanced reaction across different parts of the stock market.
U.S. Oil Prices See Sharp Buying
The spotlight today is on U.S. oil prices. While still trading within a defined range, the commodity is experiencing significant buying interest, hinting at a potential breakout.
US Oil Intraday Charts
The recent rangebound action in oil warrants a closer examination of intraday price movements, so we’ll focus on shorter-term charts rather than the daily outlook.
US Oil 4H Chart
Oil prices have been trading within a tight band, failing twice to break above the approximately $70 mark. This has led to a consolidation of the range between $65.50 and $67.00.
As previously noted, a trading range can often hold firm, even when there are signs indicating a potential shift in favor of buyers or sellers. Patience and waiting for confirmation are crucial, much like anticipating trend reversals.
Let’s delve deeper into the intraday charts to see if any current price action provides clues to a potential shift.
US Oil 1H Chart
Buyers have entered the market aggressively, pushing the commodity up by nearly 3% since the Sunday open. This strong buying momentum is notable.
Currently, oil is in overbought territory. However, given the strength of the current buying, it’s more likely we’ll see some consolidation rather than a full retracement to the lower end of the range. Oil bulls are pushing prices just above the key pivot level, situated around $67.50 in the middle of the current trading range. In rangebound markets, monitoring such pivot levels is key to identifying potential reactions.
And indeed, we are seeing reactions. Let’s take a closer look at the 15-minute chart.
US Oil 15m Chart
The price action is currently consolidating from overbought levels. Crucially, it’s holding above the identified pivot zone, which spans from $65.45 to $65.70.
This morning’s strong buying has formed a tight bull channel. Maintaining support above this pivot zone increases the probability of testing the upper limits of the current range. An intermediate resistance level from earlier July trading, around $68.50, may act as a hurdle.
