Crude Oil Turns Lower on U.S. Dollar Rise

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October Crude Oil futures reached a multi-month high today during the overnight session. Bullish traders were being driven by a report over the week-end in the weekly financial magazine Der Spiegel which said the European Central Bank is considering putting a lid on bond yields for a few of the weaker Euro-Zone member nations. The market couldn’t hold on to gains and reversed direction later in the session when it was reported that Bundesbank reiterated its opposition to ECB bond-buying.

Germany’s central bank’s opposition to additional bond-buying by the ECB helped the U.S. Dollar recover, pressuring commodities priced in dollars. Crude oil also received a boost early in the trading session after a plan to release oil stocks from reserves failed to garner any support from the global community as well as the International Energy Agency.

Technically, crude oil declined after penetrating a Fibonacci price level at $96.06. This price may prove to be important resistance if the market closes lower today. A break from current price levels is likely to be corrective in nature, however, with no sign that a change in trend is developing at this time.

December Gold is trading mixed-to-better with the movement in the U.S. Dollar controlling its intraday direction. Investors and traders continue to battle over whether gold is a reserve currency or an investment. As a reserve currency, it is subject to the movement of the Greenback. A stronger dollar tends to weaken gold. As an investment, traders look for buying opportunities on weakness while selling it on rallies. This is one of the reasons why it is stuck inside of a trading range.

According to the daily chart, December Gold is bounded by $1592.10 and $1586.30 on the downside and $1629.70 and $1633.30 on the upside.

The EUR/USD is trading inside of Friday’s range in a lackluster trade. Investors appear to be sidelined while trying to decipher mixed news stories that began to surface over the week-end. The first news report said the European Central Bank was planning to cap government bond yields in the Euro Zone. This story underpinned the Euro temporarily. Later, Bundesbank reiterated its opposition to the bond purchases, causing the Euro to reverse its course.

Although the ECB called the reports misleading, rather than take a chance on news driven reversals in the market, investors and traders have chosen to stand on the sidelines. Key support and resistance levels are 1.2385 and 1.2255 respectively.

The GBP/USD is also trading mixed-to-sideways while taking its cues from the movement in the Euro and the U.S. Dollar. Traders are still concerned about the weak U.K. economy and whether the Bank of England will provide additional stimulus. Technically, the currency pair is still being pinned by a series of tops at 1.5777, 1.5767 and 1.5744. Support is at 1.5661 and 1.5629. 

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About:FX Empire Analyst - James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.

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