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Euro and oil update local highs

January 27, 2023

EUR/USD: The European currency continues to update local highs. The euro is supported by expectations of the Fed’s rate hike of only 25 basis points at the February meeting, after which the regulator may take a wait-and-see attitude in order to assess the overall situation with inflation. The European Central Bank (ECB), in turn, is currently considering a scenario with continued tightening of monetary conditions. This will reduce the difference in interest rates and make the euro more attractive to investors. The growth factor for the euro also remains in the comments of the head of the ECB Lagarde, who supported the idea of raising the rate by 0.75% at the next two meetings. Given the above, the euro may test the resistance of 1.10.

BUY STOP 1.0910/TP 1.1000/SL 1.0880

 

Brent: Oil quotes continue to develop a bullish rally. Experts are hoping for a significant increase in fuel demand from China, which recently began lifting quarantine restrictions, which should have a positive impact on the work of industrial enterprises and the restoration of disrupted supply chains around the world. The country has recently been actively increasing its purchases of energy resources, including the Russian ones, which are offered at a discount. According to analysts of the International Energy Agency (IEA), it will lead to an increase in global demand by 1.9 million barrels per day to a record 107.0 million barrels per day, and sanctions against the Russian Federation will further reduce supply on the market.

BUY STOP 88.00/TP 90.00/SL 87.00

 

GOLD: Gold is holding positions near $1,927 an ounce. Support for the market of precious metals is provided by the weakness of the dollar. The latest macroeconomic reports from the US have strengthened investor confidence that the US Federal Reserve may revise its hawkish policy in the future and complete another cycle of raising the key interest rate. Gold buyers are also supported by a decrease in the yield of US government bonds. The yield on 10-year Treasury notes fell below 3.3% amid lower inflation forecasts. Since the news backdrop is unlikely to change in the coming days, we recommend keeping long positions.

BUY STOP 1925/TP 1940/SL 1920