Two trades to watch: EUR/USD, Dax

EUR/USD holds 1.18 for now, EZ CPI, US retail sales, consumer confidence in focus. Dax attempts a rebound.

Charts (6)

EUR/USD holds 1.18 ahead of EZ CPI. US retail sales & consumer sentiment. 

EUR/USD is holding steady at just over 1.18 and is set for weekly losses of 0.5% this week amid mixed messages from the Fed. Whilst Fed Chair Jerome Powell insisted that the US economic recovery was still away from where the Fed wants it be to tighten policy – that was in sharp contrast to St Louis Fed President who insisted that the Fed was in a situation where it could taper. 

This would be in contrast to the ECB which has just moved its goalposts for raining interest rates further out. 

All eyes now turn to a slew of data. Eurozone inflation is expected to confirm 1.9% YoY in June. 

US retail sales are expected to contact again which could offer support to the pair. US consumer confidence is also due. 


Where next for EUR/USD? 

EUR/USD trades below its 50 & 200 day ma and below its steep multi-week descending trendline. The downward sloping appears to be heading towards a cross below the 200 dma in a “death cross” bearish signal.  

The RSI is supportive of further losses whilst it remains out of oversold territory. A break below the recent three month of 1.1771 could confirm another leg lower to 1.1740 and the March 31 low of 1.17. 

Any recovery would need to retake the ascending trendline at 1.1830 and yesterday’s high of 1.1850 in order to look towards 1.1880 the July high. 

 

Dax attempts a rebound

After falling 1% in the previous session, the Dax found support and is looking to push higher. Although sentiment is mixed. Rising covid cases across the continent and further lockdown in Asia could cap gains. 

Inflation concerns also linger after elevated readings this week from US, Germany & the UK. Eurozone inflation is expected to confirm an easing in pressure in June to 1.9% below the ECB’s 2%.  


Where next for the Dax? 

The Dax has been in consolidation over the past 3 weeks, capped on the upside by the all time high just over 15000 and on the lower band by 15450. 

Yesterday’s selloff saw the Dax take out support at 15715 and move below its 50 & 200 day ma before finding support at 15580.  

The receding bearish bias on the MACD offers hope of a move higher, however any rebound would need to retake the 50 & 200 dma at around 15650 in order to head back towards 15715. 

On the flip side, a break through 15580 could se the Dax take another leg lower to 15450. A break through here could see sellers gain traction towards 15280. 


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