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Todays Market Movers - Crude and Sterling

Oct 11 2019, 07:59 PM (BDT) |

New fears and uncertainties regarding oil’s demand stability brings Crude up by 1.8%. On Friday morning, an Iranian tanker “Sabiti” was hit by missiles not far from the Saudi Port of Jeddah in the Red Sea. The oil tanker is able to carry up to 1mil. bl. of crude. 

Initially, the National Iranian Tanker Company stated that the attack probably came from the direction of the coast of Saudi Arabia, but withdrew the statement about mid-day GMT+3.  

The price of oil has slightly subsided since the retracement of the statement, as fears of immediate conflict between Saudi Arabia and Iran eased and is currently at 54.48bl. This attack comes almost exactly one month after an attack on the Saudi Aramco plant destroyed 5% of worlds oil supply. The attack was blamed on Iran, who denied these allegations, while Yemen’s Houthi rebels claimed the attack. 

All things considered, crude is still lower than it was on September 13th, prior to the drone strike on Saudi oil plant, as trade tensions place pressure on oil demand. 

The British Pound is on a rally following upbeat negotiations for an orderly Brexit. Bullish momentum started after UK Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar stated that a deal was indeed possible. The sterling got an additional boost around 10 am GMT+3 after European Council President Donald Tusk’s comment that he has received “promising signals” that a Brexit deal is possible. As a result, the Euro dropped against the British Pound by over 2%. Currently trading at 0.87786.  

Looking at the situation from the technical side of things on a 4HTF for EURGBP. The uptrend was due for a retracement, albeit we weren’t expecting such a deep correction. The price has broken below the crucial level of 61.8%. Ichimoku Cloud Base Line and Conversion Line are intertwined, the bias is unknown. RSI is showing us the pair is oversold. Can political optimism drive the pair lower or will the price bounce like on September 20th

If we have more good news from London, the next targets may be prior levels of resistance/support at 0.87493, then 0.86850, followed by 0.86320 and then 0.85815. 

If we have a bounce from support and the price moves back above the 61.8% Fibo level at 0.88076, next targets up may be found at resistance in the area of 0.88704, followed by the 50% Fibo level that is also the top of our Ichimoku Cloud and trend line up at 0.89063.

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