SnB cuts interest rates to 1.25%, does it affect Oil?

Last Thursday, members of the Swiss National Bank (SNB) board decided to lower the Sight Deposit Rate benchmark interest rate by 25 basis points (bp) from 1.50% to 1.25%.

Analysts had previously anticipated this 25 basis point reduction and projected the possibility that the SnB would lower interest rates after the SNB lowered interest rates previously in March.

The SNB’s decision reflects the response of central bank officials to economic indicators, low inflation pressures compared to the previous quarter. Due to this decrease in interest rates, CHF experienced a drastic price spike, such as CHFJPY suddenly falling after several bullish weeks. EURCHF suddenly rose after several weeks of bearish tendencies. And USDCHF suddenly rose after several days of bearish tendencies.

Meanwhile, the price of WTI oil appears to have risen from a low of 80.27 to a high of 81.34 yesterday. But the rise in oil prices may have been driven more by tensions in the Middle East than by the SNB’s decision. According to the newspaper Israel will withdraw from Rafah and will go to all-out war with Lebanon’s Hezbollah. On the other hand, rising oil prices were buoyed by yesterday’s US jobs data, lower unemployment claims even though all indications show that the US employment market is still weak.

Technical analysis of WTI oil today

Oil prices remained above the price level of 80, yesterday the price drew a bullish candlestick with a medium body and a slight shadow on the top and bottom of the candle. Price has risen from a low of 80.27 to a high of 81.36.

On the D1 oil price is now below the upper band line. Here the Bollinger bands appear to be starting to expand slightly which may reflect increased volatility.

The 50 MA below the price drew a slight descending channel, indicating a downtrend, but failed after the price crossed over from the downside.

The RSI indicator points to level 62, which means the price is above the uptrend level.

H1 timeframe

In this time frame the price is now moving between the upper and middle band lines. Here the Bollinger bands also appear to be starting to expand, reflecting a possible increase in volatility.

The 50 MA below the middle band is drawing a slight upward channel indicating uptrend momentum.

The RSI indicator points to level 57 in this time frame, which means the price is above the uptrend level.

Support and resistance

S3: 80.99 S2: 81.11 S1: 81.18 PP: 81.3 R1: 81.37 R2: 81.49 R3: 81.56