EUR/USD, FTSE 100 Forecast: Two trades to watch

EUR/USD rises after weaker US CPI, PPI up next

EUR/USD is rising for a second straight session as the US dollar remains under pressure following softer-than-expected U.S. inflation data, while investors now turn their attention to today's producer price figures.

The U.S. dollar has pulled back from a two-week high after June CPI fell 0.4% month-on-month, marking the first monthly decline in six years. The softer inflation reading prompted investors to scale back expectations of a near-term Federal Reserve rate hike. Markets are now pricing a 56% probability of a September hike, down from 78% before yesterday's CPI release. However, investors still see around an 80% chance of at least one rate hike before the end of the year.

That said, with oil prices up around 12% so far this week amid escalating U.S.-Iran hostilities, yesterday's inflation data may already be viewed as somewhat stale.

Attention now turns to U.S. producer price inflation. PPI is expected to rise 0.4% month-on-month, matching May's pace, while the annual rate is forecast to accelerate to 5.2% from 4.9%. A stronger-than-expected reading could reinforce expectations that pipeline inflation pressures remain elevated despite softer consumer inflation.

Meanwhile, Federal Reserve Chair Kevin Warsh reiterated yesterday that the Fed remains fully committed to returning inflation to its 2% target, reinforcing the central bank's inflation-fighting stance.

The euro is benefiting from the weaker dollar, although renewed gains in oil prices could ultimately limit the upside if higher energy costs revive inflation concerns globally.

In the eurozone, industrial production data is due later today and is expected to show output fell 0.5% year-on-year in May after rising 0.3% previously, highlighting the region's still-fragile manufacturing backdrop.

EUR/USD forecast – technical analysis

EUR/USD continues to trade within a falling channel that has been in place since mid-April. The pair also remains below both its 50-day and 200-day SMAs, keeping the broader technical outlook bearish.

While the pair has recovered from the 2026 low at 1.1325, the rebound has stalled around 1.1450, where the upper boundary of the falling channel also sits.

Should this resistance continue to hold, sellers will look for a move back towards 1.1350 and 1.1325. A break below 1.1325 would create a fresh lower low, exposing 1.1300 ahead of 1.1200.

On the upside, a break above 1.1450 would weaken the current bearish structure and bring 1.1500 into focus, followed by 1.1600 and the June 17 swing high.

FTSE 100 falls as weak China GDP data hits miners

The FTSE 100 is opening lower and underperforming its European peers despite supportive oil prices, as weakness in mining stocks outweighs gains in the energy sector.

Oil prices are rising for a third straight session after renewed hostilities between the U.S. and Iran. Washington has reimposed its blockade on Iranian ports, while President Trump has threatened to expand strikes on Iranian civilian infrastructure unless Tehran resumes negotiations.

The prospect of tighter crude supplies has lifted oil prices, providing support for the FTSE's energy heavyweights.

However, the broader index is under pressure as higher oil prices revive inflation concerns and push Treasury yields higher, weighing on non-yielding assets such as gold. As a result, precious metal miners are trading lower.

Industrial miners are also under pressure after Chinese GDP slowed to 4.3% year-on-year in the second quarter, below expectations of 4.5% and down from 5.0% in Q1. The reading marks the weakest quarterly growth rate since modern GDP records began in the 1990s and raises fresh concerns over demand from the world's largest consumer of industrial metals.

Elsewhere, the FTSE is lagging behind continental European markets, which are benefiting from strong earnings from ASML, Europe's largest listed technology company.

The results suggest AI-related demand remains robust and provide reassurance that companies across the semiconductor supply chain continue to benefit from elevated investment in artificial intelligence infrastructure. The FTSE's limited exposure to technology stocks means it is largely missing out on today's sector strength.

FTSE forecast – technical analysis

The FTSE 100 continues to trade above its rising trendline and remains above both the 50-day and 200-day SMAs, keeping the broader technical picture constructive.

The index recently failed to break above the 10,700 resistance zone before pulling back, although buyers successfully defended support around the 50-day SMA. The RSI remains neutral, suggesting scope for another move in either direction.

Buyers will look for a break above 10,575 to retest the 10,700 resistance area. A move above there would bring the record high at 10,950 back into focus.

Initial support is located around the 50-day SMA at 10,400, followed by the rising trendline near 10,380. A break below this support zone would expose 10,200, where the 200-day SMA coincides with horizontal support from May.