Two trades to watch: EUR/USD, FTSE

EUR/USD attempts to capitalise on a weaker USD after upbeat German retail sales. EZ & US manufacturing PMIs in focus.

Charts (3)

EUR/USD looks to manufacturing PMIs  

EUR/USD ticks higher at the start of the week attempting to capitalise on the weaker US Dollar, which is tracing yields southwards as senators discuss infrastructure spending. 

German retail sales beat estimates rising 4.2% MoM in June as the economy reopened. This was ahead of the 2% forecast. YoY sales rose 6.2% in June, up from -2.4% as the economy reopened. 

Eurozone manufacturing PMI awaited, expectations for 62.6 in July, down slightly from 63,4 in June. 

US ISM manufacturing PMI expected to tick higher to 60.9 in July up from 60.6. 

Forex hours explained

Where next for EUR/USD? 

EURUSD broke out from a falling wedge last week, retaking the 200 sma on the 4 hour chart and hitting resistance at 1.1908. The pair eased lower on Friday, snapping a 4 day winning streak before finding support on the 50 sma at 1.1855. 

The bearish crossover on the MACD favours the sellers. However, any move lower would need to break back below the 200 sma at 1.1855 before testing 1.1840 July 27 high and 1.18 the round number. 

Should the 200 sma hold a move towards 1.1908 last week’s high and 1.1975 the June 25 high could be on the cards. 


FTSE heads higher with banks in focus 

European bourses are expected to head higher on Monday following stability in Asia overnight and solid results from HSBC. 

HSBC saw pre-tax profits for H1 come in at $10.8 billion, more than double earnings in the same period last year. It released $700  that had been set aside for bad loans and reinstated dividend payments. 

Gains in indices could be capped by weakness in Chinese factor activity growth. 

UK manufacturing PMI is expected to confirm 60.4 in July, down from 63.9 in June. 

Where next for the FTSE? 

The FTSE continued to rebound last week, retaking resistance at 6990, the 100 sma.  

The FTSE is extending gains today retaking the 50 sma at 7070.  

The bullish crossover on the MACD supports further upside. Immediate support can be seen at 71 the descending trendline from June 16 and last week’s high. A move beyond here could see 7150 July 13 high come into play ahead of 7180 the July high. 

Support can be seen at 6990 the 100 sma and July 9 low. 

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