Markets Spooked by Saudi Oil Price Shock

EURUSD Maintains Bullish Gains

The euro continues its onslaught, rising against a weaker US dollar. Price action is within reach of the 1.1500 level. Price action gapped higher on Monday’s open near the 1.1300 handle. There is a risk that price could retrace gains to the gap. The momentum could recover unless the Stochastics oscillator manages to break the bearish divergence.

 

WTI Crude Oil Bounces off 2016 Lows

Crude oil prices fell over 30% on the day on Monday’s open. Price fell to 2016 lows of 28.00 before recovering. The declines came as Saudi Arabia started a price war following Russia’s reluctance to cut oil production. The rebound could see a possible retracement to the declines. However, it is still too early to call a bottom in prices.

GBPUSD Retreats Off the Resistance Level

The pound sterling is building a strong momentum to the upside. Price action briefly tested the resistance level near 1.3200 before slipping back. We expect prices to consolidate within the 1.3200 and 1.2960 level. The Stochastics oscillator has slipped back from the overbought levels. A renewal in the momentum will see price likely retesting the resistance level once again.

 

XAUUSD Retreats After Hitting 1700

Gold prices surged on Monday’s open to test the 1700 level. However, price action retreated off these highs. The lower support level of 1655 will be in check for the moment. Below the 1655 level, the next main support is at 1632. Unless prices reverse near 1655, we expect price action to remain subdued to the downside.