Crude oil prices soar as Middle East tensions rise

Crude oil prices soar as Middle East tensions rise – Crude oil prices have spiked at the beginning of the Asian session today due to rising tensions in the Middle East. Israel has announced its preparation to attack Iran, causing Brent Crude to near the $80 mark, the highest level since the end of August. The general outlook has shifted to strongly bullish after last week’s close. However, US futures are pointing to a negative start of the week, with S&P500 and Nasdaq100 futures currently down by 0.5%, and Dow Jones down by 140 points.

The US jobs report on Friday was better than expected. It added 254,000 new jobs, surpassing the estimated 147,000. The unemployment rate also decreased to 4.1% from 4.2%, which was anticipated to remain the same. Additionally, average hourly earnings exceeded estimates, rising by 0.4%.

The Fed Funds Futures are currently pricing in a 50-basis-point rate cut from now until the end of the year. This implies that the upcoming meetings will likely result in 25-basis-point rate cuts each. Before the announcement of the US jobs report, markets were anticipating a 75-basis-point rate cut by the end of the year.

DXY upside retracement continues

The US Dollar Index is continuing its upward retracement after the US jobs report on Friday. It has reached as high as 102.60, which is the highest level since mid-August, nearing the 102.80 resistance area. The upward retracement is expected to continue as estimates of aggressive rate cuts by the Federal Reserve are fading.

The technical indicators are showing bullish signals across most timeframes, and they have not reached overbought levels yet, indicating the potential for further upward movement. The 50% Fibonacci retracement level, starting around 103.15, from the peak in June to the low of September, is a key level to monitor next.

EURUSD below 1.1000

The Euro has been declining for six straight sessions after it failed to break above the 1.12 resistance area, reaching as low as the 1.0960 support area after the US jobs report on Friday. This move does not change the bullish outlook. It can be considered a short-term retracement before the upside trend resumes.

In the meantime, it is crucial to hold above 1.0960, otherwise, a deeper retracement is more likely. A break below the mentioned support would pave the way for further declines, possibly towards 1.0930 followed by 1.0900 for now.

Gold remains strong above $2640

Gold has been trading within the same range since reaching its record high on September 26th. It has been testing the $2640 support area and has managed to hold well above that support without a clear breakdown or breakout. The technical indicators remain overbought, which suggests the possibility of another downward movement in the coming days.

Tensions in the Middle East continue to be a major factor in stabilizing Gold near its record high, with the risk of a regional war increasing. Despite this, any potential downward movement is expected to be limited. After analyzing the daily, weekly, and monthly charts, there are currently no bearish signs, which may take several weeks or months to develop.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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