Markets Analysis

Oil Rises; Saudi Official Warns Against Speculative Short Selling【May 24, 2023】

May 24, 2023

Markets Analysis

Fundamental Analysis

  • Major U.S. Stock Indexes Fall Back, Failure to Agree on U.S. Debt Ceiling Negotiations
  • Yen buying strengthened slightly in NY session due to awareness of default risk
  • Saudi officials warn against speculative moves, but do not mention specific measures
  • AUD all around lower, approaching the lower end of the range
  • USD/JPY mostly unmoved, with a wait-and-see attitude and no clear sense of direction
  • Eurozone Manufacturing Index Shrinks, Eurodollar Slips Back

Technical Analysis

The mood is becoming more and more suspicious as the U.S. debt ceiling negotiations are not progressing. The dollar seems to have lost its sense of direction and is waiting to see where the negotiations will lead. If a default really occurs, the market will be in turmoil and the yen may appreciate sharply. Crude oil is slowly rising. Buying has been strong after a senior Saudi official made a warning comment to short-selling investors.

Pound Dollar (GBPUSD)

Analyze the daily chart of the pound dollar. The price is turning from an uptrend to a downtrend and has fallen to USD 1.2373. We consider USD 1.2359 to be an important price area to be aware of. Today, the U.K. Consumer Price Index is scheduled to be released, and the focus will be on whether or not inflation is under control. If inflation is suppressed, there is a possibility that interest rate hikes will be suspended, and downward pressure will intensify.

Since the lower mustache is extending, there seems to be a willingness to push the market lower. We would like to follow the market to see the outcome.

Estimated rangeUSD 1.234 – USD 1.25
Resistance lineUSD 1.2472
Support lineUSD 1.2359

NZ Dollar (NZDUSD)

The NZ policy rate is due for release; a 0.25% rate hike is expected, but the chart shape suggests a decline. It has an “inverted N” and when applied, the target price is around USD 0.6050. In a downside direction, the moving average could be a support band. Volatility increases around policy rate announcements, so caution should be exercised.

Estimated rangeUSD 0.6213 – USD 0.6312
Resistance lineUSD 0.628
Support lineUSD 0.6222

Crude Oil (USOUSD)

Crude oil is forming a small range, but with a slight upward trend. A major resistance zone is expected to be around USD 73.73; above USD 73.73, the possibility of another close to the moving average cannot be ruled out. The rally was triggered by a senior Saudi official’s warning against speculative moves.

On the other hand, if the U.S. economy begins to slow down, downward pressure will increase due to the awareness of demand for crude oil. Until the truth of the Saudi official’s statement is known, it is advisable to trade cautiously.

Estimated rangeUSD 69.84 – USD 74.52
Resistance lineUSD 73.73
Support lineUSD 72.27

Today’s Important Economic Indicators

Economic Indicators and EventsJST (Japan Standard Time)
NZ Policy Rate Announcement11:00
UK Consumer Price Index15:00
U.S. FOMC MinutesThe next day at 3:00

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.

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