With oil almost to our upside target from last month, and DXY having reached our next downside target, today should shed some light on the direction over the next few weeks.

On June 20 [see: Jun 20 Update on Oil] we anticipated WTI would bounce off the bottom of the rising purple channel to the resulting .886 at 50.96.  A week later, we slightly adjusted the timing to Aug 8 and price target to 49.82.  This morning, CL reached 49.39, meaning there are some important decisions to be made about oil prices, currencies and inflation.  It’s a great segue to Part II of yesterday’s post on central bank options.continued for members…

My gut reaction is that oil will level off here before heading back down, and DXY and USDJPY will recover while EURUSD finally deflates.  But, we’ll need to see how CL reacts at this resistance.

There’s certainly more room for DXY to fall after having broken down below support, and EURUSD has no specific overhead resistance other than the fact that it’s overshot a reasonable level. VIX seems to have given up on racing to zero, at least for the moment.While ES looks like it’s fleshed out its rising purple channel…… SPX appears to have broken down and is backtesting its.  A failure to hold the SMA10 means the previous high of 2453.82 is in play.  If that fails, then we’re probably looking at a backtest of the broken purple channel at around 2435.I’ll be posting more this weekend.  In the meantime, GLTA.