Two trades to watch: FTSE, EUR/GBP

FTSE rises cautiously as risk sentiment improves despite global recession fears. EUR/GBP rises from 5 year low ahead of EZ GDP.

Charts (3)

FTSE cautiously climbs

Russia, Ukraine peace talks make little progress which combined with fears over a global recession mean any recovery in sentiment will remain cautious.

Oil prices are once again climbing as the US could still press ahead with a ban on Russian imports, despite Europe not agreeing. Meanwhile, Russia threatens that oil prices could rise to $300 if gas supply to Europe is slowed.

Commodity prices across the board are rising, adding to fears of stagflation, slowing economic growth and surging inflation.

There is no UK economic data due today leaving risk sentiment in the driving seat.

Where next for FTSE?

The FTSE fell to a low of 6800, the rising trendline support dating back to March 2020, but failed to find acceptance at these levels, with buyers quickly coming back in a pushing the price back up above 6950.

Today the price is looking towards 7000 as the RSI teeters on the edge of oversold a bounce was likely on the cards, or at least some consolidation.

Any recovery would need to retake 7000 the key psychological level ahead of 7100 the December 20 low.

Meanwhile, sellers will be encouraged by the 20 sma crossing below the 50 sma. Bears will look for a move below 6800 in order to target 6620 the March 2021 low.


FTSE chart

EUR/GBP rises from 5 year low ahead of EZ GDP

EUR/GBP is extending gains for a second session after steep falls across the previous week.

The Euro is finding support after spiking to a 5 year low as the Eurozone is more exposed to developments in Ukraine, given its geographical location and its dependence on Russian energy.

Recent data from Germany has been encouraging, retail sales jumped 2% MoM in January, recovering firmly from Omicron. German factory orders also rebounded strongly at the start of the year sand industrial production in the eurozone’s largest economy rose 1.8% MoM, beating forecasts of 0.5%.

However, the more recent Eurozone Investor sentiment data revealed that confidence plunged to a 16 month low in March as Russia invaded Ukraine.

Looking ahead Russian headlines will drive the pair, Eurozone Q4 GDP is also due to confirm 0.3% growth QoQ in line with the previous estimate.

Where next for EUR/GBP?

EUR/GBP reversed the drop to 0.82 yesterday and has re-entered the falling channel within which it has traded since early September. The RSI is attempting to push back towards 50 which is giving buyers reason to be hopeful. Although a meaningful mover over support at 0.83 is needed to expose the 20 sma at 0.8350.

Meanwhile, the 20 sma is crossing below the 50 sma could be considered a sell signal. Bears could look for a move below 0.8280 in order to bring 0.8230 the Friday low into play ahead of 0.82.


eurgbp chart


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account