EUR/USD FTSE 100 Forecast: Two trades to watch

EUR/USD rises towards 1.11 on USD weakness ahead of key data

EUR/USD is pushing higher amid a weak USD ahead of more data from the US later today.

The US dollar is under pressure, falling to a weekly low against its major peers amid rising concerns over the US economic outlook. These concerns are underpinning expectations of an outsized rate cut from the Federal Reserve next week.

Markets have been jittery about the health of the US economy following softer-than-expected US manufacturing PMI data earlier in the week and JOLTS job openings falling to a 3 1/2-year low.

Today's attention is on the ADP payroll report and ISM services PMI to gain further clarity on the health of the economy and the labor market before tomorrow's important non-farm payroll report.

Ahead of the data, the market is pricing in a 41% probability of an A50 basis point rate cut at the Federal Reserve's 18 September meeting, up from 34% last week.

Meanwhile, the euro is rising after German factory orders unexpectedly increased for a second straight month. Demand rose 2.9% in July ahead of the 1.7% drop that economists had expected.

Eurozone retail sales also supported the common currency. Retail sales rose by 0.1% in July, rebounding from a decline in June.

EUR/USD forecast – technical analysis

EUR/USD broke out from the rising channel and the 200 SMA is sloping higher as the EUR/USD forms a series of higher highs and higher lows. The pair has eased lower from 1.12, before finding support at 1.1050 and is attempting to move higher again. Buyers will look for a rise above the round number and 1.1140 the December 2023 high to extend gains towards 1.12 to form a new higher high.

Sellers will need to break below 1.10 to negate the near-term uptrend.

FTSE 100 struggles amid global growth concerns

The FTSE is holding steady below 8400 amid a cautious market mood ahead of more US data later today. Concerns over slowing economic growth have weighed on global indices this week, ahead of the US data on Friday.

The market remains jittery about the growth prospects for the US, the world's largest economy. Data this week showed that manufacturing activity was lower than expected and that Jolts job openings were the weakest in 3 1/2 years. US ADP payrolls and US ISM services PMI data are due today and could help set expectations for tomorrow’s non-farm payroll report.

Housebuilders are under the spotlight after Vistry posted encouraging results, with an 11% rise in revenue and a 7% rise in pre-tax profits. The firm is on track to build 18k homes in the full year. Meanwhile. The UK construction PMI showed solid output growth was maintained across the construction sector in August.

Recent UK data has been encouraging, but this hasn’t helped the more international-focused FTSE 100. UK services PMIs were upwardly revised in August as the economy continues to benefit from political stability and falling inflation & interest rates.

Meanwhile, worries over China’s growth have acted as a drag on the index as well after Chinese data earlier this week showed that the services PMI was weaker than forecast and the official China manufacturing PMI also remained in contraction.

FTSE 100 forecast - technical analysis

FTSE has traded in a holding pattern since early June. While the price attempted a breakout, the move ran into resistance at 8400 and rebounded lower back into the holding pattern.

The price remains above the rising trendline dating back to the start of the year and the 200 SMA is sloping higher, supporting a break out to the upside. Buyers will look to rise above 8380, the upper band of the parallel channel, and 8410, the August high. A rise above here brings 8480 into focus.

On the downside, sellers would need to break below 8240 the 50 SMA to test the lower band of the parallel channel.