FTSE 100, EUR/USD drop as oil price surges 8%
Technical analysis of the FTSE 100, EUR/USD amid Middle East conflict sell-off while oil price rallies 8%.
Macro update
Iran leadership vacuum unsettles markets:
US and Israeli strikes reportedly killed Iran’s Supreme Leader, triggering retaliatory missile attacks and heightening fears of an extended regional conflict and potential internal power struggle in Tehran.
Oil spikes on Hormuz disruption:
Brent crude oil surged by 9% to the $75 range after tanker flows through the Strait of Hormuz were disrupted, with more than 200 vessels said to be waiting outside the chokepoint.
Equities weaken as risk appetite fades:
S&P 500 futures fell over 1%, European futures declined and Japan’s Nikkei 225 dropped by over 2.5% as investors trimmed risk exposure amid concerns over growth and inflation.
Safe havens mixed amid inflation worries:
Gold rose around 2.5% and the US dollar strengthened, while 10-year US Treasury yields hovered near an 11-month low around 3.9%, though some analysts cautioned that higher oil prices could curb bonds’ appeal.
Inflation risks re-emerge:
Economists warned that a sustained move in oil towards $100 per barrel could add roughly 0.6 - 0.7 percentage points to global inflation, complicating the outlook for central banks and rate cuts.
Downside risks remain:
While equity losses are contained for now, further declines are possible if the conflict escalates or critical oil infrastructure becomes a target.
FTSE 100 comes off record highs
The FTSE 100 is coming off last week's 10,936 record high amid the Middle East conflict with the 20 February high and February to March uptrend line at 10,745 to 10,738 representing potential downside targets.
Minor resistance is seen around the 26 February high at 10,871 and at last week's 10,936 all-time high.
Short-term outlook:
Toppish while below the 10,936 February peak, targeting the 10,745 to 10,738 region.
Medium-term outlook:
Bullish while above the 6 February low at 10,211.
FTSE 100 daily candlestick chart
EUR/USD falls out of bed
EUR/USD drop below its recent $1.1870 low on flight-to-safety flows into the greenback amid the ongoing Middle East conflict has pushed the 200-day simple moving average (SMA) at $1.1666 to the fore.
Minor resistance may be spotted around the 19 February low at $1.1870 and also at the 6 February low at $1.1766.
Short-term outlook:
Bearish while below the 6 February low at $1.1766, targeting the $1.1700 region.
Medium-term outlook:
Bearish while below the $1.1831 late February high.
EUR/USD daily candlestick chart
Oil price surges 8%
The US-Israel-Iran conflict provoked a surge in the oil price, so far taking West Texas Intermediate (WTI) to $75.33. Above this level lurk the June 2025 peaks at $77.10 - $77.57 which may cap the advance today. If not, the psychological $80.00 region may be hit.
Potential support is seen around the November 2024 high at $77.84, the October 2024 and April 2025 highs at $72.36-to-$72.22 and at November to mid-December 2024 highs at $71.47 - $71.38.
Short-term outlook:
Bullish while above the 2 March low at $69.20.
Medium-term outlook:
Bullish while above the 26 February low at $63.60.
WTI daily candlestick chart
Important to know
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Follow us online
