Two trades to watch: EUR/USD, FTSE

EUR/USD rises ahaed of ECB minutes. FTSE rises as Boris Johnson clings to power.

EU (1)

EUR/USD rises ahead of ECB minutes

EUR/USD fell to a fresh 20-year low of 1.0160 yesterday on the back of a soaring USD and rising recession fears. The energy crisis in Europe continues to cast a dark shadow over the economic outlook.

Today the pair is attempting to rise amid an improved mood in the market despite weaker than expected German industrial production data. German industrial production rose 0.2% MoM in May, down from 0.7% in April and below the 0.4% forecast.

Attention now turns to the release of ECB minutes, which investors will be assessing for clues over how aggressively the central bank looks to raise interest rates.

The USD is easing today after strong gains yesterday. The minutes to the latest Fed meeting didn’t show anything that the market didn’t already know. Even so, the hawkish rhetoric lifted expectations of a 75 basis point rate hike in the July meeting to 94%, up from 86,7% yesterday.

US ADP payroll data and initial jobless claims figures are expected to show the US jobs data remains resilient. ADP payrolls are expected to rise to 200k, up from 128k. Initial jobless claims are to stay steady around 230k.

Where next for EUR/USD?

Yesterday’s low of 1.0160 is now the immediate support with a break below the level needed to bring 1.01 into play, with follow-through selling and opening the door to 1.01.

On the flip side, a recovery needs to retake 1.0350 to negate the near-term bearish trend and expose the 20 sma at 1.0455. A rise over 1.06 is needed for bulls to gain traction.


FTSE rises as Boris Johnson clings to power

The FTSE is rising for a second straight session amid an improving market mood.

Whilst fears of aggressive central bank tightening fuelled recession fears, those recession fears have pulled commodity prices markedly lower. As a result, inflation worries have eased slightly helping stocks higher, even the FTSE which is heavily weighted in commodity stocks.

The FTSE has also found support from the weaker pound which has dropped 2.6% over the past two weeks.

There is no high impacting UK economic data due today. Instead, investors will watch developments in Westminster as Boris Johnson refuses to quit despite over 40 government resignations. There are growing worries that he could call a snap general election, the last thing the economy need right now.

Where next for FTSE?

The FTSE rebounded off 7000 earlier in the week and the move higher broke above resistance at 7150 and is testing the 20 sma at 7200.

A move over 7200 is needed to test 7235 and the weekly high of 7290. Above here the late June high of 7355 and the 50 sma come into play.

On the flip side, failure to retake the 20 sma could see the index test immediate support at 7150, with a break below here opening the doo to 6970 the June low.


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