Israel Under Attack, Oil Prices Rise Sharply

On Friday, trading in WTI oil futures on the NYMEX closed at USD 82.81 per barrel. And on Monday morning, they opened at a price of USD 85.25 and began to quickly rise in price, reaching 87.24. Natural gas prices have also risen sharply.

The reason is Saturday's attack on Israel. And, of course, associations arise with the oil crisis of 1973, when Arab oil-producing countries refused to supply raw materials to the United States and other allies that supported Israel. Then the price of a barrel rose from USD 3 to 12 in six months.

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GBP/USD Starts Recovery While USD/CAD Corrects Lower

GBP/USD started a recovery wave from the 1.2040 zone. USD/CAD is correcting gains and trading below the 1.3700 support.

Important Takeaways for GBP/USD and USD/CAD Analysis Today

• The British Pound is eyeing a fresh increase above the 1.2270 resistance.

• There is a connecting bullish trend line forming with support near 1.2180 on the hourly chart of GBP/USD at FXOpen.

• USD/CAD rallied toward the 1.3800 level before it started a downside correction.

• A declining channel is forming with resistance near 1.3700 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair accelerated lower below the 1.2200 zone. The British Pound even traded below the 1.2120 support against the US Dollar, as discussed in the previous analysis.

Finally, the bulls appeared near the 1.2040 zone. The pair is now attempting a recovery wave above the 50-hour simple moving average and 1.2120. There was a spike toward the 1.2270 resistance. A high has formed near 1.2261 and the pair is now consolidating gains.

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Natural Gas Price Reaches 8-month High

As the chart shows, yesterday, the price of gas rose above USD 3.60 for the first time since January of this year.

It can be assumed that events in Israel contributed to the price increase, since the Middle East is an important supplier of gas.

However, note that the bullish momentum started much earlier — gas prices have risen approximately 20% since the October 3 low. This confirms our assumptions about the bullish trend, which we published in the review on August 25th.

Perhaps the price of gas is influenced by seasonal factors and fears that weather conditions in the coming winter will be difficult.

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BOE Concentrates on Persistent Inflation Whilst US Stocks Fly

Bank of England policy committee member Catherine Mann emphasised the need for a more aggressive central bank response to prolonged inflation exceeding target levels. She highlighted the importance of addressing not only the current high inflation but also the risk of inflation expectations rising in the future. Ms. Mann's call for a proactive approach to inflation management came after her preference for a rate increase at the BOE's last meeting, while her colleagues voted to maintain the status quo.

According to Ms. Mann, "Policy has to be more aggressive because it has to address both a drift in expectations as well as the actual inflation." She expressed concern about the persistence and duration of elevated inflation, underscoring the importance of managing embedded inflation expectations.

The British pound is moving upward against the US dollar for the sixth day.

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EUR/USD Attempts Recovery While USD/CHF Revisits Support

EUR/USD started a recovery wave above the 1.0550 resistance. USD/CHF declined and now trading near the 1.0450 support zone.

Important Takeaways for EUR/USD and USD/CHF Analysis Today

• The Euro gained pace after it broke the 1.0550 resistance against the US Dollar.

• There is a major bullish trend line forming with support near 1.0570 on the hourly chart of EUR/USD at FXOpen.

• USD/CHF declined below the 0.9140 and 0.9080 support levels.

• There is a connecting bearish trend line forming with resistance near 0.9080 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair started a recovery wave from the 1.0450 level. The Euro even cleared the 1.0485 barrier to move into a short-term bullish zone against the US Dollar.

The bulls pushed the pair above the 50-hour simple moving average and 1.0570. Finally, the pair tested the 1.0615 resistance. It is now consolidating gains above the 23.6% Fib retracement level of the upward wave from the 1.0519 swing low to the 1.0619 high.

Immediate support on the downside is 1.0595. The next major support is near a bullish trend line at 1.0570 and the 50-hour simple moving average.

The trend line is close to the 50% Fib retracement level of the upward wave from the 1.0519 swing low to the 1.0619 high. A downside break below the 1.0570 support could send the pair toward the 1.0485 level.

Immediate resistance on the EUR/USD chart is near the 1.0615 zone. The first major resistance is near the 1.0650 level. An upside break above the 1.0650 level might send the pair toward the 1.0700 resistance.

The next major resistance is near the 1.0720 level. Any more gains might open the doors for a move toward the 1.0800 level.

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Bank of England Expresses Concern Over Overvalued US Tech Stocks Amid Macro-Economic Uncertainty

The Bank of England has voiced concerns over the soaring valuations of US technology stocks, citing the current macroeconomic landscape and the surge in interest rates. This commentary underscores the evolving dynamics in global financial markets.

The UK stock market stands in stark contrast to its tech-focused counterpart in the United States, particularly the NASDAQ. The London Stock Exchange is home to well-established blue-chip firms with traditional corporate foundations.

These companies span industries such as retail, pharmaceuticals, energy, leisure, and heavy industry. In contrast, NASDAQ boasts tech giants from Silicon Valley, including titans like Apple and Google, as well as recent entrants through Special Purpose Acquisition Companies (SPACs), with valuations soaring into the billions.

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E-mini S&P 500 Positive Ahead of Earnings Season

As we wrote in our October 8 market analysis, the S&P 500 chart made bullish arguments, including:
→ the S&P 500 price has reached the lower boundary of the ascending channel (shown in blue);
→ RSI fell to its minimum in 12 months.

Technically, these factors were justified, because today, the S&P 500 has strengthened, the price is near the psychological level of 4,400. Yesterday’s news also contributed to this:
→ inflation suddenly accelerated. The Producer Price Index (PPI) was 0.5%, although 0.3% was expected. The acceleration of inflation was influenced by the September peak in the oil market. But with the price of oil already back more than 10% from its peak, traders are not expected to be too worried about the PPI rise;
→ a "majority" of Fed officials thought another rate hike would "likely be appropriate" to help cool demand and bring inflation closer to its 2% inflation target over the next two years, while "some" said “no". “Participants generally noted that it was important to balance the risk of overtightening against the risk of insufficient tightening,” the minutes said.

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The Price of Gold Rises More Than 5% Since Last Friday

The rise in the price of the (considered a safe haven) asset was driven by:
→ escalation of geopolitical conflicts;
→ increasing US government debt and rising bond prices make gold a more attractive option for a defensive portfolio.

Also, according to Business Insider, global central banks are buying gold in an effort to diversify reserves away from the dollar.

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Gold Price Surges While Crude Oil Price Dips Amid Israel-Hamas War

Gold price surged above the $1,848 resistance after the Israel-Hamas war escalated. Crude oil price saw swing moves and is now trading below the $83.70 resistance.

Important Takeaways for Gold and Oil Prices Analysis Today

• Gold price started a steady increase from the $1,810 zone against the US Dollar.

• A key rising channel is forming with support near $1,868 on the hourly chart of gold at FXOpen.

• Crude oil prices failed to clear the $86.00 region and corrected gains.

• There is a connecting bearish trend line forming with resistance near $83.00 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price found support near the $1,810 zone. The price started a steady increase after the Israel-Hamas war.

There was a decent move above the 50-hour simple moving average. The bulls pushed the price above the $1,848 and $1,868 resistance levels. Finally, the price tested the $1,885 zone before the bears appeared.

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EURUSD Analysis: New Test for Support Level of 1.0500

Yesterday, another indicator of inflation in the United States was published — the CPI (Consumer Price Index). Like the PPI (Producer Price Index), the values of which were published on Wednesday, the CPI index indicated that inflation in the US remains stable (actual = 3.7%, forecast = 3.6%, a month earlier = 3.7%, two months earlier = 3.2%), however, this time, the reaction of market participants was sharper:
→ the stock market declined;
→ gold fell in price (although buyers in the Asian session on Friday contributed to the recovery);
→ the dollar index rose sharply.

Before the publication of news about inflation, the probability of a rate hike at the December Fed meeting was at 28%, but now it is 40%. The thesis “higher rates for a longer time” has returned to relevance.

For a technical analyst, changes in sentiment and spikes in volatility provide a new piece of valuable information. Let's take the EUR/USD chart for example.

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GBP/USD Restarts Decrease, EUR/GBP Aims Higher

GBP/USD started a fresh decline from the 1.2335 resistance zone. EUR/GBP is rising and might climb above the 0.8665 resistance.

Important Takeaways for GBP/USD and EUR/GBP Analysis Today

• The British Pound is again declining and trading below the 1.2200 support.

• There was a break below a key bullish trend line with support near 1.2220 on the hourly chart of GBP/USD at FXOpen.

• EUR/GBP is rising and trading above the 0.8650 zone.

• There was a break above a major bearish trend line with resistance near 0.8635 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair attempted a fresh increase above 1.2200. However, the British Pound failed above 1.2320 and started a fresh decline against the US Dollar.

There was a clear move below 1.2250 and the 50-hour simple moving average. The bears pushed the pair below a key bullish trend line with support near 1.2220. It opened the doors for a move toward the 1.2120 level.

A low is formed near 1.2122 and the pair is now consolidating losses. On the upside, the GBP/USD chart indicates that the pair is facing resistance near the 23.6% Fib retracement level of the downward move from the 1.2337 swing high to the 1.2122 low at 1.2175.

The next major resistance is near the 50-hour simple moving average at 1.2200. The main resistance could be the 50% Fib retracement level of the downward move from the 1.2337 swing high to the 1.2122 low at 1.2220.

A close above the 1.2220 resistance zone could open the doors for a move toward 1.2335. Any more gains might send GBP/USD toward 1.2450.

On the downside, there is a key support forming near 1.2120. If there is a downside break below the 1.2120 support, the pair could accelerate lower. The next major support is near the 1.2040 zone, below which the pair could test 1.2020. Any more losses could lead the pair toward the 1.2000 support.

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In One Session, Price of Gold Rose by Approximately $60

The opening price on Friday was around 1,870, the closing price was around 1,930. The reason for the rapid growth of the XAU/USD quote is geopolitical tension. Israeli forces announced a ground operation in the Gaza Strip, which may be why before the weekend the markets were dominated by the forces of demand for gold as a defensive asset.

The Chinese Foreign Ministry said Israel's actions went beyond self-defense. And the famous investor Ray Dalio expressed the opinion that the risk of global war is 50% due to the situation in the Middle East.

The XAU/USD chart shows that the price of gold has reached the upper limit of the downward channel.

Technically:
→ the price of gold may encounter resistance from the upper border;
→ the price may roll back from the overbought zone, which is indicated by the stochastic oscillator;
→ the price may be supported by the psychological level of 1,900;
→ support may be provided by the level of 1,885; previously the price formed reversals from it.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.