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

EUR/USD falls below 1.11 as US-China agree to pause tariffs

• US-China pause trade tariffs for 90 days
• USD rallies against major peers on the news
• EUR/USD falls below 1.11 to a monthly low

EUR/USD has fallen sharply on Monday to its lowest level in a month, below 111, as the US and China reached an agreement on a 90-day pause, lowering tariff rates.

The de-escalation has boosted the US dollar and turned investors bearish on the euro. This currency had benefited from the sell America trade when Trump’s Liberation Day tariffs were announced.

The USD is rising against its major peers following a weekend of talks in Geneva and a joint US-China statement on Monday. In it, both sides said they would drop trade levies imposed since U.S. President Donald Trump's April 2nd tariffs.

Hello, U.S. Treasury Secretary Scott Bessent said the two sides had agreed today that more attacks would be reduced by over 100%. This tariff reduction was larger than expected and came sooner than expected, boosting demand for the USD.

Looking out across the week, US CPI is expected to show that inflation remained steady at 2.4% annually in April. Federal Reserve Chair Jerome Powell is also due to speak after last week's warning against higher inflation and unemployment due to trade tariffs. The market will watch to see if his stance changes in light of the latest developments.

Meanwhile, the euro will be watching eurozone ZEW economic sentiment figures and eurozone GDP data later in the week. The ECB is expected to cut interest rates again in June to support growth and cool inflation.

EUR/USD forecast  - technical analysis

EUR/USD is falling 1% lower, as the pair breaks below 1.12, dropping out of its rising channel to a low of 1.1080, the 50 SMA. The RSI has fallen below 50, favoring the bears.

Sellers will need to break below the 50 SMA to extend losses towards the 1.10 psychological level.

Buyers would need to rise above 1.12, the September high. A rose above here brings the lower band of the rising channel into play at 1.1280, which is also a horizontal resistance.

FTSE rises on trade optimism, miners drive the gains

• Miners rise on US–China de-escalation optimism
• Pharmaceuticals fall as Trump plans to lower drug prices
• FTSE 100 rises but remains below 8700

The FTSE 100 and its European peers are opening higher on Monday, boosted by a de-escalation and the US-China trade war.

After meeting over the weekend, the US and China agreed to temporarily reduce tariffs for 90 days. Following trade talks in Geneva, US tariffs on Chinese imports have dropped to 30%, and Chinese tariffs on US imports have dropped to 10%.

The market had relatively low expectations of these icebreaker talks, which appear to have brought more results and more quickly raised hopes for de-escalation in the trade war between the world's largest economies.

Heavyweight miners such as Glencore, Antofagasta, and Anglo American lead the charge, trading up over 7%. Mine is tracking metal prices higher, which are closely tied to the health of the Chinese economy. Oil majors are also tracking oil prices higher as the demand outlook improves from the following weekend talks.

In company use, AstraZeneca lost its crown as the UK's most valuable listed company after President Trump's plans to lower drug prices. This sent shares of pharmaceutical companies lower across the world. AstraZeneca's market cap has fallen to around £154 billion, putting it below HSBC's 156 billion.

FTSE forecast - technical analysis

The FTSE recovered from the 7535 low before running into resistance at 8700. The price has eased back from this level and is consolidating around 8600.

Buyers supported by the RSI above 50 will look to rise above 8700 to create a higher high, opening the door to 8910 and fresh record highs.

On the downside, support can be seen at 8520, last week’s low, and 8480, the confluence of the 50 and the 100 SMA. A break below here exposes the 200 SMA at 8370.