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Oil market is extending near-term recovery today, driven by recent reports that OPEC+ has reached a preliminary agreement to cut oil production by over 1 million barrels per day. This development, reported by two OPEC+ sources to Reuters, has sparked optimism among traders and investors, leading to an extension in the near-term recovery of oil prices.

The proposed reduction is significant, as it includes Saudi Arabia's continuation of its voluntary cut of 1 million bpd, which has been in effect since July. Additionally, the deal involves further contributions from other OPEC+ members, marking a concerted effort to stabilize oil prices amidst global economic uncertainties.

From technical analysis standpoint, WTI crude oil is now eyeing key resitsance level at 79.98, which is close to 80 psycholgoical level. Decisive break there will argue that whole corrective fall from 95.50 has completed with three waves down to 72.65. In this case, stronger rebound should be seen back to 81.77/91.07 resistance zone in the near term.

The momentum for this potential rebound in oil prices hinges on confirmation of the OPEC+ deal. Should the agreement be officially confirmed, it could act as a catalyst, triggering further upward movement in oil prices.

San Francisco Fed President Mary Daly, in an interview with Germany's Börsen-Zeitung newspaper, expressed confidence in the current state of monetary policy, stating that "policy is in a very good place" as Fed has "raised the key interest rate significantly."

She further mentioned, "We don't need an insurance mentality now, where we hedge against rising inflation. We should simply be patient and remain vigilant."

Regarding future rate adjustments, Daly clarified, "I'm not thinking about rate cuts at all right now." She emphasized her current focus on evaluating whether the current level of monetary tightening is sufficient to restore price stability.

Daly also provided an optimistic view of the economy, noting, "Our inflation data are improving and our real economy has not stalled." She added, "I don't see a recession on the horizon at the moment."

Eurozone inflation fell much further than expected in October, leaving the headline HICP rate within touching distance of the ECB's 2% target.

While policymakers have continued to push back against talk of rate cuts, the questions will be impossible to ignore now with markets pricing in one in April and at least four in total next year.

Core inflation remains higher than the headline rate at 3.6% but the pace of deceleration is extremely promising. While policymakers expect inflation to rise slightly over the coming months due to less favorable base effects, they also expected it to fall slower recently so there's every chance price growth could continue to edge lower.

One thing that been consistent during this inflation crisis has been its unpredictability and perhaps we're seeing this on the way down too. It was initially transitory, then required some rate hikes and before you knew it, it was accelerating at a much more aggressive pace than anyone expected. Now it's falling faster than policymakers assumed too.

And with the eurozone economy on the brink of recession, policymakers will have to question whether conditions are too tight based on recent evidence, almost certainly starting at the meeting in two weeks. So far we've been told that it's not the time to even have the conversation but surely that's no longer true. The December meeting has just become much bigger and forecasts will be crucial.

US inflation continues to fall ahead of December Fed meeting

US inflation is also heading in the right direction, although the bulk of the PCE readings were in line with expectations. Still, the monthly headline figure printing at 0% was another step in the right direction and below market expectations which again suggests disinflationary pressures are stronger than central banks have been willing to accept.

Policymakers at the Fed must already be considering withdrawing such a hawkish rhetoric after the meeting in two weeks and it will be interesting to see whether the jobs and CPI inflation reports in the interim tip them one way or the other.

A consensus reached among OPEC+?

Oil has continued to creep higher today but price action has been a little volatile amid all of the rumours around the virtual meeting. The most recent headlines suggest a consensus has been reached but what that number is still isn't clear. Between 1.3 and 2 million is what's been speculated but the alliance has surprised before and may do so again.

Daily Pivots: (S1) 1.0947; (P) 1.0982; (R1) 1.1004; More...

While EUR/USD's pull back from 1.1016 extends lower today, it's holding well above 1.0851 support. Intraday bias remains neutral first, and further rally is still expected. On the upside, firm break of 1.1016 will resume the rise from 1.0447 to 1.1274 resistance next. But strong resistance should be seen there to limit upside. However, sustained break of 1.0851 will confirm short term topping, and turn bias back to the downside for deeper fall.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern to rise from 0.9534 (2022 low). Rise from 1.0447 is tentatively seen as the second leg. Hence while further rally could be seen, upside should be limited by 1.1274 to bring the third leg of the pattern.

Daily Pivots: (S1) 1.2662; (P) 1.2697; (R1) 1.2730; More...

Intraday bias in GBP/USD remains neutral for the moment, and more consolidations could be seen below 1.2731. For now, further rally is in favor as long as 1.2426 resistance turned support holds. On the upside, sustained trading above 61.8% retracement of 1.3141 to 1.2036 at 1.2716 will pave the way to retest 1.3141 high.

In the bigger picture, price actions from 1.3141 are seen as a corrective pattern to rise from 1.0351 (2022 low). Strong rebound from 38.2% retracement of 1.0351 (2022 low) to 1.3141 at 1.2075 suggests that current rise from 1.2036 is already the second leg. However, while further rally could be seen, upside should be limited by 1.3141 to bring the third leg of the pattern.

Daily Pivots: (S1) 0.8712; (P) 0.8748; (R1) 0.8775; More....

USD/CHF recovered after hitting near term falling channel support and intraday bias is turned neutral first. Some consolidations could be seen. But risk will stay on the downside as long as 0.8886 support turned resistance holds. On the downside, break of 0.8716 temporary low will resume the fall from 0.9243 to 161.8% projection of 0.9243 to 0.8886 from 0.9111 at 0.8533, which is close to 0.8551 low.

In the bigger picture, price actions from 0.8551 are currently seen as part of a corrective pattern to the decline from 1.0146 (2022 high). Fall from 0.9243 is seen as the second leg for now. Deeper decline could be seen to 0.8551 low but strong support should be seen there to bring rebound. For now, this will remain the favored case as long as 0.8886 resistance holds.

Daily Pivots: (S1) 146.63; (P) 147.27; (R1) 147.87; More...

USD/JPY's rebound from 146.65 extended higher today, and immediate focus is on 55 4H EMA (now at 148.61). Sustained break there will argue that corrective fall from 151.89 has completed with three waves down to 146.65. Intraday bias would be back on the upside for 149.66 resistance for confirmation. Nevertheless, rejection by 55 4H EMA will resume the fall from 151.89 towards 145.06 key support level.

In the bigger picture, rise from 127.20 (2023 low) is seen as the second leg of the pattern from 151.93 (2022 high). Decisive break of 145.06 resistance turned support will confirm that this second leg has completed, after rejection by 151.93. Deeper fall would be seen through 38.2% retracement of 127.20 to 151.89 at 142.45 to 61.8% retracement at 136.63. Nevertheless strong bounce from 145.06 will retain medium term bullishness for another test on 151.93 at a later stage.

The pull-back in GDP in Q3 (-1.1% annualized) was substantially softer than expected, although following an upwardly revised 1.4% gain (previously -0.2%) in Q2.

Still, the details of the Q3 data were soft - GDP would have declined a larger 3% in the quarter without a 7.3% jump in government spending.

Business investment pulled back 10%, led by a drop in equipment purchases. And consumer spending was essentially unchanged for a second consecutive quarter.

With population growing rapidly, per-capita growth rates continue to look substantially softer - GDP per-capita declined for a fifth straight quarter in Q3, consistent with a drift higher in the unemployment rate since the spring.

Household purchasing power held up well, rising 1% from Q2, in part due to higher government transfers. But a smaller share of that income is being spent with the household saving rate edging up for a second straight quarter. And softer labour markets mean income growth is expected to slow going forward.

Early data for Q4 has been mixed. GDP edged up 0.1% in September (slightly stronger than expected) and the advance estimate for October was +0.2%. Those early estimates have been exceptionally revision-prone, and should be taken with a large grain of salt.

Output in the manufacturing sector fell almost 5% (annualized in Q3), and the retail and hospitality sectors also pulled back alongside soft consumer spending.

Bottom line: A revision to Q2 output prevented the Q3 drop from counting as a 'second consecutive decline'. But the macro backdrop continues to look soft, particularly controlling for high levels of population growth that are boosting both the production capacity of the economy and the number of consumers. Labour markets have also looked softer - job vacancies separately reported this morning fell another 6% in September and are down more than 30% from a year ago. We expect the BoC to remain on hold for now with inflation still running above target - but our own forecast assumes the central bank will pivot to rate cuts starting to soften into next year.

• Eurozone HICP inflation 2.4% in October (2.9% in September, 2.7% expected)
• Eurozone core HICP inflation 3.6% in October (4.2% in September, 3.9% expected)
• EURGBP continues lower after bearish breakout on Monday

Eurozone inflation fell much further than expected in October, leaving the headline HICP rate within touching distance of the ECB’s 2% target.

While policymakers have continued to push back against talk of rate cuts, the questions will be impossible to ignore now with markets pricing in one in April and at least four in total next year.

Core inflation remains higher than the headline rate at 3.6% but the pace of deceleration is extremely promising. While policymakers expect inflation to rise slightly over the coming months due to less favorable base effects, they also expected it to fall slower recently so there’s every chance price growth could continue to edge lower.

One thing that been consistent during this inflation crisis has been its unpredictability and perhaps we’re seeing this on the way down too. It was initially transitory, then required some rate hikes and before you knew it, it was accelerating at a much more aggressive pace than anyone expected. Now it’s falling faster than policymakers assumed too.

And with the eurozone economy on the brink of recession, policymakers will have to question whether conditions are too tight based on recent evidence, almost certainly starting at the meeting in two weeks. So far we’ve been told that it’s not the time to even have the conversation but surely that’s no longer true. The December meeting has just become much bigger and forecasts will be crucial.

EURGBP slips again but quickly runs into support

It’s been an impressive run lower over the last week or so, with the break below the rising channel coming in the middle of that.

Source – OANDA on Trading View

It’s now run into support around the 11 October lows and bounced strongly off that level but that doesn’t necessarily mean the sell-off has run its course. The momentum indicators continue to look very healthy, making lower lows alongside the price, for example.

The size of the move we’ve seen since the breakout is also still small compared with the channel itself, which may suggest there’s more to go. Of course, these things are never guaranteed. If we are seeing a brief rebound, though, 0.8680 could be a very interesting area of potential resistance, falling around the bottom of the channel it recently broke below and the 200/233-day simple moving average band.

• Ethereum pulls back from recent multi-month high
• Generates a structure of lower highs and higher lows
• Momentum indicators suggest that buying interest is fading

ETHUSD (Ethereum) experienced a strong rally since late October, which propelled the price to 2,136, its highest level since April. However, in the past few weeks, the leading altcoin has been trading without a clear direction, with the formation of a pennant pattern hinting at an impending breakout.

Should the pennant break to the upside, the bulls could attack the recent resistance region of 2,090. A violation of that zone could pave the way for the six-month high of 2,136 just shy of the 2023 peak of 2,142. Slicing through the latter, the price may then challenge the 2,200 psychological mark.

Alternatively, bearish actions might encounter initial support at the 2,000 psychological mark. Further declines could then cease at the November support of 1,928, which also acted as resistance in May and June. Even lower, the May support of 1,800 could prove to be a tough barricade for the price to overcome.

Overall, ETHUSD has been trading within a range in the past week, but its technical setup is warning of a potential spike. Meanwhile, the momentum indicators are not giving a clear sign regarding the direction of the upcoming move.