EUR/USD holds 1.21 ahead of German IFO business sentiment data. WTI crude oil under pressure as COVID cases rise in India & Japan.

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EUR/USD holds 1.21 ahead of German IFO sentiment data 

EUR/USD trades slightly higher at the star of the new week, rallying to its highest level in 2 months. 

An improving outlook for the bloc amid an accelerating vaccine programme is helping to lift demand. News that the Eurozone will welcome US tourists is underpinning the currency. 

The US Dollar drops to its lowest level since March as US stocks futures edge higher around record highs whilst US treasury yield continue to edge lower. 

Looking ahead German IFO business sentiment data and US durable goods numbers will be in focus. 

Where next for EUR/USD? 

Last week the EUR/USD broke above 1.20 for the first time since March. The pair closed above the 20 & 50 EMA on the daily chart. The 20 EMA is crossing above the 50 EMA in a bullish signal. 

The RSI is also supportive of further gains whilst it remains  out of overbought territory. 

Immediate resistance at 1.2112 the March high, is being tested. This level needs to be surpassed in order to target 1.2243 the February high. 

On the flip side, 1.20 the round number offers strong support, before 1.1950 the 20 & 50 EMA come into play. A break through this level could negate the current uptrend and see the sellers target 1.1830 low March 8 (FXE, UDN). 

Oil under pressure amid declining demand expectations 

The oil demand outlook weakened as COVID cases continue to surge in Japan and India. 

Cases in India, the world’s third largest oil importer topped 16.9 million. Meanwhile Japan announced a state of emergency in Tokyo, Osaka and two other prefectures on Sunday in a bid to stem the spread of COVID ahead of the Olympics. 

Wednesday’s OPEC meeting is under the spotlight as traders await clues over supply. 

Where next for oil prices? 

Oil trades under pressure falling out of the ascending channel on the hourly chart which had shown WTI’s short term recovery. 

WTI has fallen below its 50 & 100 HMA and the RSI is in bearish territory suggesting that there could be further losses. 

Immediate resistance can be seen at 61.35 today’s low. A break through here could see bears target 60.60 last week’s low. 

Any recovery would need to push over the lower band of the ascending channel at 60.65 before attacking the 50 & 100 HMA’s between 60.80-90. Beyond here the bulls could gain more traction looking towards 62.00 and 62.75 (OIL).