Two trades to watch: DAX, EUR/GBP
DAX looks to earnings, manufacturing PMIs. EUR/GBP approaches 0.85 on Brexit developments, EZ manufacturing PMI due.
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DAX looks to earnings, manufacturing PMI
The DAX along with European equities are easing lower on Tuesday in cautious trade as the Fed’s two day meeting kicks off.
Broadly encouraging earnings helped the DAX book strong gains in the previous session. More earnings are due today, German Health care company Fresenius is in focus.
Attention will also be on the release of German and Eurozone manufacturing PMIs for October. Given that these are final readings they may not be as market moving as the flash estimates. Expectations are for the 58.2 and 58.5 respectively, just 0.1 off the September figure.
Where next for the DAX?
The DAX continues to rebound from the 14800 early October low. The index trades above its 50 & 200 sma and above its multi-week ascending trendline.
Yesterday’s push higher took the price above its resistance at 15780. This is currently holding as support.
The bullish SI is keeping buyers optimistic of further gains towards 16000 and fresh all-time highs.
A break below 15780 the horizontal support and 15700 the rising trendline exposes the 50 sma at 15550. A move below here could negate the near-term uptrend.
EUR/GBP approaches 0.85 on Brexit developments, EZ manufacturing PMIs
The Pound was the worst performing G10 currency in the previous session after post Brexit fishing tensions escalated between Britain and France.
Overnight the news has been more encouraging with France saying that it will hold off with fishing sanctions on the UK for now. However, the spat has served to remind pound traders that Brexit is far from resolved.
Eurozone manufacturing PMIs will be in focus for the euro. The common currency is also finding some support from the softer US Dollar.
Where next for EUR/GBP?
EUR/GBP is extending its rebound from 0.84 at the end of October. The bullish crossover on the MACD is keeping buyers hopeful of further gains.
Bulls need to break meaningfully above resistance at 0.85 in order to expose the 50 sma 0.8525 and for bulls to gain traction.
On the flip side, failure to close above 0.85 could see the pair move back towards 0.8475 last week’s high and 0.8420 support.
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