Two trades to watch: EUR/GBP, Dax
Fiona Cincotta June 24, 2021 3:04 AM
Will inflationary pressures prompt a more hawkish tilt from BoE? Dax rebounds off support, looks to IFO economic sentiment data.
EUR/GBP ahead of BoE interest rate decision
BoE is expected to keep policy unchanged. However, with the economic picture improving and inflation above the BoE’s target will the central bank be prompted to adopt a more hawkish stance?
Attention will be on the MPC vote on continuing with QE. The May vote was 8-1, should more policy makers dissent, the Pound could get a boost.
Whilst the economy is ramping up firmly, the BoE will be mindful of rising delta variant covid cases and the looming end of furlough in the Autumn.
German IFO economic sentiment data is due.
Where next for EUR/GBP?
EUR/GBP trades below its multi-month descending trendline. It trades below its 50 & 100 sma on the 4 hour chart and the 50 sma crossed below the 100 sma in a bearish signal earlier this month.
The RSI is in bearish territory supportive of further downside whilst it remains above 30, the oversold level.
Immediate support sit at 0.8530, a level that sellers need to break through in order to bring 0.85 round number and psychological level into focus.
On the flip side, any recovery would need to break above the 50 sma at 0.8575. A move above this level could negate the near-term downtrend.
Dax finds support ahead of IFO sentiment data
European bourses are heading higher, rebounding after yesterday’ s selloff. Wall Street closed mixed with the Nasdaq reaching fresh all time highs.
German IFO economic sentiment data is expected to show that morale improved with expectations for business climate to tick higher to 100.6 in June, up from 99.2.
More Fed speak in the US session could drive sentiment.
Where next for the Dax?
The Dax broke lower from a rising wedge pattern at the end of last week. The index dropped lower finding support on the 50 day ma before rebounding. Moves higher this week have been capped by the 2 week descending trend line.
The price is on the rise. Any meaningful recovery will need to break above the trendline at 15650 in order to retest the all time high at 15800.
Still, the MACD is keeping sellers hopeful. Any move lower needs to break through the 50 sma at 15400. A move below 15250, Monday’s low .
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 Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.