Light crude, EUR/USD and EUR/GBP ideas

We are entering the eye of the storm with regards to the Greek negotiations.

Light crude
Source: Bloomberg

US light crude

US light crude has been sold off aggressively this morning and the techincal set-up can be put into good perspective if you look on the two-hour chart.

The American Petroleum Institute detailed a 14.3 million increase in stockpiles, again adding to the supply/demand imbalance. With US light crude under selling pressure, the falls triggered stops through the 17 February low of $51.00. The bears will be eyeing a move to the 11 February low of $48.09 and it seems short positions are preferred from a risk/reward perspective. There is clear resistance around $54.00 (as seen on the charts), marking a triple top and, unless US light crude can break this point, a neutral or bearish bias is warranted.


Looking at the hourly chart, it seems the upside in EUR/USD is limited to $1.1450, but if we get to $1.1500 you can see good supply has come into the market since early February. The $1.1500 level remains that line in the sand and I would expect money managers to fade upside moves to here in the short term. 

With the Greek issues now firmly in the spotlight, the likelihood is we should see some sort of temporary compromise. However, my back of the envelope calculation shows there is a 25% chance the Eurogroup reject Greece’s loan extension proposal as being too vague. If that happens, a move below $1.1300 can’t be ruled out in the short term.


The pair continues to make lower lows, although there was good buying pressure coming into the pair yesterday from £0.7350. My bias is for the pair is to trade lower from here, but I would use rallies to £0.7420 to initiate shorts.

As detailed in the EUR/GBP piece, the market now focuses on today’s Eurogroup meeting in which the group will decide on whether to accept the request for a loan extension. A failure to come up with agreement should see EUR/GBP sold off aggressively. We are entering the eye of the storm with regards to the Greek negotiations.

Click to enlarge

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.