Oil price declines as US agrees to remove Iran sanctions

The euro continued to decline after a series of mixed economic data. Earlier today, Germany released the import price index data for August. In the month, the import price index declined by -2.7%. This was a worse decline than the consensus estimates of -2.6%. On a MoM basis, the price declined by -0.6%, which was lower than the previous decline of -0.2%. In France, the CPI rose by an annualized rate of 0.9%, which was lower than the previous 1.0%. The preliminary HICP rose by 1.1%, which was lower than the previous 1.3%. In the EU, the business and consumer survey declined from 103.1 in August to 101.7. Industrial sentiment declined to -8.8 from the previous -5.8.

The price of crude oil declined sharply after a report stated that Saudi Arabia and Yemen had reached a ceasefire. This report was released by the Wall Street Journal, which quoted sources with the information. The two countries have been at war since 2015 which has led to the death of thousands of people. The ceasefire comes almost two weeks after Yemen Houthis attacked the biggest oil terminal in Saudi Arabia. If the ceasefire is confirmed, it reduces chances of a confrontation between the two countries. The news also came a day after Trump sent 200 military personnel to Saudi Arabia. Another catalyst was the news that the US had agreed to remove sanctions in exchange for talks. 

The US dollar rose after mixed data from the US. In August, core durable goods orders rose by 0.5%. This was higher than the expected increase of 0.2% and July’s decline of -0.5%. The headline durable goods orders rose by 0.2%, which was better than the expected decline of -1.1%. The core PCE rose by 1.8% as was expected. Personal income rose by 0.4%, which was higher than July’s 0.1% while personal spending rose by 0.1%, which was lower than the previous gain of 0.5%.

EUR/USD

The EUR/USD pair continued the descent, reaching an intraday low of 1.0900. This was the lowest level since 2017. On the daily chart, the pair is trading below all the short, medium, and long-term moving averages. The RSI has also declined and is currently at 38 while volumes have declined slightly. The average directional index has soared to almost 50. The pair will likely continue moving lower as the European economy continues to weaken.

XBR/USD

The XBR/USD pair declined sharply after the reported ceasefire between Saudi Arabia and Yemen. It was also in reaction to news from Iran. The pair reached a low of 59.70, which was the lowest level since Saudi Arabia was attacked. This means that the pair has completed filing the gap that was formed on Monday a week ago. The RSI has moved to the oversold level of 31. The price is along the lower line of the Bollinger Bands. The pair will likely continue moving lower to test the important support of 58.50.

XAU/USD

The price of gold continued falling after the news from Saudi Arabia and Yemen. The XAU/USD pair reached a low of 1490.70 and is now trading at 1495, which is along the 23.6% Fibonacci Retracement level. This week, the pair has dropped from a high of 1535.37. The price is now below the 14-day and 28-day moving averages while the RSI is at the oversold level. The pair will likely continue moving lower.