Two trades to watch: EUR/GBP, Nasdaq

Close-up of market chart
Fiona Cincotta
By :  ,  Market Analyst

EUR/GBP rises as UK CPI hits 9.4%

 

EURGBP rose 0.5% yesterday and is on the rise again today. The euro was boosted by reports from Moscow that Russia intends to switch on the gas supply along the Nord Stream 1 pipeline tomorrow as planned. The relief that gas supply to countries such as Germany will be restarted boosted the common currency.

Reports that the ECB was looking at a 50-basis point hike rather than a 25 bp hike on Thursday also boosted the common currency.

Meanwhile, the pound is falling despite hotter-than-expected UK inflation data. CPI rose 9.4% YoY in June, up from 9.1%. The jump in inflation is double the rise in wages, therefore fuelling the cost-of-living crisis.

The data piles pressure on the BoE to hike rates by 50 bps when it meets in August. In a speech at Mansion House yesterday, BoE governor Andrew Bailey floated the idea of an outsized hike.

Where next for EUR/GBP?

 

EUR/GBP has rebounded from 0.84, the July low, and has run into resistance around 0.8540, the confluence of the 20 & 50 sma.

The bullish crossover on the MACD is keeping buyers hopeful of further upside. Buyers need to rise over 0.8540 to extend the bullish trend towards 0.8615, the May high.

Failure to retake the 50 & 20 sma could see the price tick lower to 0.8490, the June low. A break below here could open the door to 0.84.

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Nasdaq extends gains with earnings in focus.

 

The Nasdaq jumped 3.1% yesterday, boosted by the continued easing of aggressive Fed bets and by a broadly upbeat start to earnings season. Investors shrugged off news that Apple was slowing its hiring plans. Instead, big tech pushed higher with a strong rally in Alphabet, Amazon Meta, and Nvidia.

Netflix impressed with its Q2 number overnight, reporting a loss of 970,000 subscribers, less than the 2 million feared. Earnings also beat forecasts at $3.33 vs. the $2.93 forecast.

Looking ahead, Tesla is set to report later, with the Street expecting EPS of $1.73 on revenue of $18.26 billion.

There is no high impacting US economic data until Friday leaving earnings to take center stage.

Where next for the Nasdaq?

 

After hitting a 2022 low of 11036, the price has been steadily climbing, forming a series of higher lows. The price broke above resistance at 12200 yesterday, which, combined with the bullish MACD and the rise above the 50 sma, keep buyers hopeful of further gains.

Resistance can be seen at 12600, the May 17 high, ahead of 13000.

On the flip side, failure to hold above 12200 support could see the index fall towards 11500, the weekly low, ahead of 11035, the 2022 low.

 

 

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Related tags: Trade Ideas EUR GBP Nasdaq

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