Two trades to watch: Dax, GBP/USD
Fiona Cincotta January 28, 2021 4:19 PM
Dax extends losses amid fears of vaccine shortages and extended lockdown restrictions GBP/USD trades under pressure ahead of US Q4 GDP
Dax extends losses
Concerns over the impact of the pandemic still dominate in Europe with extended lockdown restrictions and fears of vaccine shortages.Looking ahead German CPI data is expected to show a rebound in inflation +0.7% MoM in January vs -0.3% in December.
GBP/USD under pressure ahead of US Q4 GDP
The GBP/USD is trading under pressure declining for a second straight session amid a firmer US Dollar and as EU demands UK covid vaccines from AstraZeneca.
UK calendar is quiet today so the focus will be on the US side as traders continue to digest the FOMC policy decision and as traders look ahead to the US Q4 GDP reading which is expected to show that the US economy rose 4% in the final quarter.
Fed Powell warned that last years’ momentum was likely to fade at the start of this year.
Here my colleague Matthew Weller analyses the FOMC meeting and its impact on the USD.
US jobless claims and consumer spending numbers will also be in focus later.
GBP/USD technical analysis
After the formation of a double top pattern, GBP/USD continues to retreat from its 32 month high, trading -0.2% at 1.3660 at the time of writing.
The price has fallen through its 50 sma on the 4 hour chart and the RSI is also in negative territory and pointing southwards. The bias is to the downside with further weakness towards 1.36 possible.
First strong support at 1.3630 the confluence of the 100 sma and the ascending trend line needs to be overcome. A move below 1.3520 would indicate the start of a deeper pullback.
On the flipside any attempted rebound could see resistance tested at 1.37 prior to the multi year high of 1.3750.
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