Two trades to watch: EUR/USD, S&P500

EUR/USD hovers around 1.16 ahead of ECB rate decision. S&P 500 eases back from record highs GDP & earnings in focus

Charts (1)

EUR/USD hovers around 1.16 ahead of ECB

The ECB are due to announce their monetary policy decision today as EUR/USD trades near it

The central bank is expected keep interest rates on hold. So far the ECB has not offered a tapering timeline. However, with inflation at a 13 year high, President Christine Lagarde could tee-up for a December announcement.

So far policy makers have played down high inflation, sticking religiously to the transitory script. However, with mounting inflation and slowing growth Christine Lagarde will need to convince the market that the slow, steady approach to normalization is achievable.

US Q3 GDP is due to be released. QoQ growth of 2.7% is forecast down from 6.7%

Learn more about the ECB

Where next for EUR/USD?

EUR/USD trades below its falling trendline dating back to late May and is hovering around its lowest level in over a year.

On the 4 hour chart EUR/USD has traded within a tight range ahead of today’s meeting. Across the week the pair has been limited of the upside by the 50 sma on the 4 hour chart whilst the lower side have been limited by 1.1585. The RSI is also neutral at around 50.

Sellers will be looking for a move below 1.1585 the weekly low to bring 1.1523 into focus and fresh year to date lows.

Buyers, meanwhile, will look for a move above 1.1625 to expose the 200 sma at 1.1655. It would take a move above 1.1675 for the buyers to gain traction.

EURUSD chart

S&P eases back from record highs GDP & earnings in focus

After surging to an all time high at the start of the week, the S&P 500 has eased lower

Earnings season saw an encouraging start. However, we are starting to see a divergence play out whereby tech stocks are outperforming, and manufacturers are being impacted by supply chain bottlenecks and part shortages.

US GDP is due to reveal 2.7% QoQ growth, as the reopening boom is being hampered by supply chain issues, labour shortages and rising prices.

Learn more about the S&P500

Where next for the S&P?

Where next for the S&P?

The S&P rallied to an all-time high of 4598 and has since corrected lower bringing the RSI out of overbought territory.

The MACD has turned bearish, however support at 4550, the weekly low is holding up for now. Should the support hold buyers would look for a move back toward 4598 and fresh all time highs.

Sellers would need to break below here in order to expose 4535 the 50 sma on the 4 hour chart. It would take a move below 4485 to negate the near term uptrend and a move below 4450 for sellers to gain traction.

S&P 500 chart


 

 

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