Increased Geopolitical Tensions Offset Crude Oil Oversupply

Economic

Commodity

Summary:

OPEC+ decided at the end of last week that crude oil production will increase by 411,000 barrels per day in July. This is the third consecutive production increase by OPEC+. Increased geopolitical tensions offset the bearish oil prices.

SELL WTI

Close Time

CLOSED

63.068

Entry Price

57.040

64.800

57.537 +0.304 +0.53%

173.2

Pips

Loss

57.040

64.801

Exit Price

63.068

Entry Price

64.800

Fundamentals

Crude oil prices surged on Monday following drone strikes by Ukraine on Russian territory, raising concerns about potential supply disruptions. These attacks offset OPEC+'s planned production increase of 411,000 barrels per day in July.

While the market anticipated the supply increase, it should have a limited impact on prices in the short term. However, the outlook for oversupply remains unchanged through the end of 2025. With no indication of OPEC+ slowing its quota increases, WTI crude could trade around US$50 per barrel by the first half of 2026.

The European Commission announced on the 2nd that the EU is preparing its 18th round of sanctions against Russia, focusing on Russian energy revenues. The new sanctions will target the Nord Stream infrastructure, Russian banking, and further reductions in the crude oil price cap.

In Berlin, European Commission President von der Leyen met with a delegation led by U.S. Republican Senator Graham to coordinate on Russia sanctions. Following the meeting, the EU announced Graham's commitment to intensify pressure on Russia, with a bill slated for Senate consideration next week, a move von der Leyen welcomed. She emphasized that aligning EU and U.S. actions would significantly amplify the sanctions' impact.

Looking ahead, crude oil price movements may continue to be influenced by API and EIA inventory data, alongside global trade developments.

Increased Geopolitical Tensions Offset Crude Oil Oversupply_1

Technical Analysis

WTI crude oil prices exhibit consolidation following a test of resistance near US$63.61, currently trading around US$62.30 per barrel. WTI appears to be forming a horizontal trading range, with key support at US$60.50 and recent highs near US$63.24.

The bearish bias persists, given the continued validity of the 1H head and shoulders top pattern. However, in terms of momentum, the stochastic oscillator is currently hovering in neutral territory, indicating neither bulls nor bears have decisive control. Further volatility is anticipated, necessitating close monitoring for potential divergences or momentum shifts.

The Relative Strength Index is also in a mid-range position, reflecting the ongoing consolidation phase. While remaining above the midpoint, maintaining a marginally bullish outlook, a break below 50 would signal increased selling pressure.

Trading Recommendations

Trading Direction: Sell

Entry Price: 63.30

Target Price: 57.04

Stop Loss: 64.80

Valid Until: June 18, 2025 23:55:00

Support: 61.71、60.50、59.43

Resistance: 63.27、63.51、64.04

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Economic

Summary:

EUR/JPY holds near 163.30 as traders await key Eurozone inflation data and digest hawkish remarks from BoJ Governor Ueda.

BUY EURJPY

Close Time

CLOSED

163.698

Entry Price

165.000

162.700

182.143 -0.786 -0.43%

70.5

Pips

Profit

162.700

164.403

Exit Price

163.698

Entry Price

165.000

The euro held steady against the Japanese yen during the Asian trading hours on Tuesday, with EUR/JPY lingering around 163.30 as investors looked ahead to the release of critical Eurozone inflation figures. The pair’s stability followed modest gains in the previous session, underlining market resilience amid central bank crosswinds and renewed global trade tensions.

Later in the day, the spotlight will turn to the Eurozone’s Harmonized Index of Consumer Prices (HICP) report—a key barometer for inflation across the bloc. Market participants are eager to see whether price pressures have subsided enough to shift the European Central Bank’s cautiously hawkish stance. A higher-than-expected reading could fuel speculation that the ECB might hold interest rates higher for longer, thereby bolstering the euro. On the other hand, a downside surprise could weaken the case for tight monetary policy, potentially dragging on the single currency.

While the euro awaits inflation clarity, the Japanese yen is facing its own tug-of-war as markets digest signals from the Bank of Japan. Speaking on Tuesday, BoJ Governor Kazuo Ueda reiterated that the central bank is prepared to raise interest rates if inflation and economic momentum develop as forecasted. He emphasized that Japan’s economy continues to recover moderately despite pockets of weakness, and that corporate earnings and business sentiment remain on a positive trajectory. Ueda also revealed that the central bank will revisit its bond tapering plans at its next policy meeting, taking into account feedback from bond market participants.

Despite this hawkish tone, the yen failed to find meaningful support. Part of the reason lies in broader currency market dynamics, particularly a modest rebound in the U.S. dollar. The dollar’s recovery is being driven largely by technical correction and positioning shifts as traders brace for heightened trade-related tensions. The Biden administration is expected to enact new “double import tariffs” on steel and aluminum, raising duties from 25% to 50%, starting Wednesday. Although these measures are part of the lingering legacy of Trump-era trade policies, their reimplementation comes at a delicate time, as concerns about stagflation grow within the U.S. economy.

Europe, meanwhile, has responded to Washington’s renewed protectionist stance with sharp criticism. Over the weekend, the European Commission expressed strong disappointment at Trump's plan to escalate tariffs, warning that such moves threaten to derail ongoing trade negotiations. In a statement quoted by the BBC, the Commission said Trump's decision “undermines the efforts” of both parties to reach a balanced agreement and suggested that Brussels may consider countermeasures if the U.S. proceeds.

This resurgence in trade tensions comes at a time when the global economy is delicately balanced between cooling inflation and persistent structural risks. For currency markets, this geopolitical overhang could trigger fresh bouts of volatility, especially in euro and yen crosses, which are often sensitive to macroeconomic uncertainty and shifts in global risk sentiment.

Technical Analysis

On the technical front, EUR/JPY continues to trade within an established ascending channel that has shaped the pair’s bullish trajectory in recent weeks. After bouncing from a key support level near 163.000, the euro regained upward momentum, signaling strong interest from buyers looking to maintain control.

The structure of the rally suggests that as long as the pair holds above 163.000, bulls are likely to remain in command. Momentum has been building steadily, with the next immediate level of interest emerging around 163.700—a zone that could attract short-term supply.

A break above this level would set the stage for a potential push toward 165.00, a key resistance that may prove pivotal for determining whether the rally extends further.

TRADE RECOMMENDATION

BUY EURJPY

ENTRY PRICE: 163.70

STOP LOSS: 162.70

TAKE PROFIT: 165.00

Risk Warnings and Disclaimers

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Eva Chen

Economic

Commodity

Summary:

Gold prices held below the four-week highs touched earlier on Tuesday. The intraday decline was driven by the emergence of some dollar buying, which tends to weaken demand for gold.

BUY XAUUSD

Close Time

CLOSED

3355.67

Entry Price

3500.00

3299.00

4340.32 +40.93 +0.95%

566.7

Pips

Loss

3299.00

Exit Price

3355.67

Entry Price

3500.00