Two trades to watch: FTSE, EUR/USD

FTSE rises with BP, HSBC in focus

 

The FTSE is heading higher for a fourth straight day on Tuesday, boosted by higher oil prices.

Oil prices jumped yesterday on news that the EU was moving towards a phased ban on Russian oil.

BP reported its highest Q1 profit in years of $6.25 billion, despite a $24 billion charge for withdrawing from Russia, thanks to the exceptional performance of its oil and gas trading division.

HSBC is likely to focus after its largest stakeholder, Chinese insurance giant Ping An called for a break up of its UK bank.

UK manufacturing PMI data is expected to show a slowdown in growth to 55.3 in April, down from 55.5, amid concerns that firms could struggle to pass on rising costs.

Where next for the FTSE?

 

The FTSE rebounded off the 200 SMA, recapturing 7400 and the 50 sma at 7440. The receding bearish bias on the MACD keeps buyers hopeful of further upside.

Buyers will look for a move over the 7500 round number to bring the 7600/7630 resistance zone into focus ahead of 7640, the post-pandemic high.

Sellers could look for a move below 50 sma at 7440 to bring 7305 the 200 SMA and April low into focus. A break below here could create a lower low and see sellers gain traction.

 

EUR/USD falls ahead of ECB's Lagarde, PPI data

 

EURUSD is edging lower, extending losses from the previous session when the dismal market mood dragged the pair lower.

Today, the improved market mood is supporting the euro. Eurozone PPI data is expected to jump to 36% in April, up from 32%, suggesting that consumer prices still have further to run.

A speech from ECB governor Christine Lagarde will also be in focus. With inflation surging but fears of a recession could prevent the ECB boss from sounding hawkish.

The US dollar index rose to an almost 20-year high of 103.93 yesterday ahead of the Fed meeting this week. Today, as the two-day meeting kicks off, the USD is pausing for breath. Fed Powell & Co. are expected to sound aggressively hawkish.

Where next for EUR/USD?

 

EUR/USD hovers around 1.05, trading below its 50sma and multi-month falling trendline. The RSI has topped into oversold territory, so some consolidation around this level is likely, although the outlook for the pair remains tilted to the downside.

Sellers will look for a break below 1.0470, 2022 low, to open the door to 1.04 round number and 1.0340, the 2017 low.

On the upside, resistance can be seen at 1.0593, the April 29 high, with a move above here exposing the 50 sma 1.0930 and the mid-April high. A move above here could negate the near-term downtrend ahead of 1.10 the psychological level, but it is quite a haul up to there.