Two trades to watch: EUR/GBP, Dax

Will inflationary pressures prompt a more hawkish tilt from BoE? Dax rebounds off support, looks to IFO economic sentiment data.

Brexit 8

EUR/GBP  ahead of BoE interest rate decision 

BoE is expected to keep policy unchanged. However, with the economic picture improving and inflation above the BoE’s target will the central bank be prompted to adopt a more hawkish stance? 

Attention will be on the MPC vote on continuing with QE. The May vote was 8-1, should more policy makers dissent, the Pound could get a boost. 

Whilst the economy is ramping up firmly, the BoE will be mindful of rising delta variant covid cases and the looming end of furlough in the Autumn. 

German IFO economic sentiment data is due. 

Learn more about BoE 

Where next for EUR/GBP? 

EUR/GBP trades below its multi-month descending trendline. It trades below its 50 & 100 sma on the 4 hour chart and the 50 sma crossed below the 100 sma in a bearish signal earlier this month.  

The RSI is in bearish territory supportive of further downside whilst it remains above 30, the oversold level. 

Immediate support sit at 0.8530, a level that sellers need to break through in order to bring 0.85 round number and psychological level into focus. 

On the flip side, any recovery would need to break above the 50 sma at 0.8575. A move above this level could negate the near-term downtrend. 

 

Dax finds support ahead of IFO sentiment data 

European bourses are heading higher, rebounding after yesterday’ s selloff. Wall Street closed mixed with the Nasdaq reaching fresh all time highs.  

German IFO economic sentiment data is expected to show that morale improved with expectations for business climate to tick higher to 100.6 in June, up from 99.2. 

More Fed speak in the US session could drive sentiment. 

Dax trading guide 

Where next for the Dax? 

The Dax broke lower from a rising wedge pattern at the end of last week. The index dropped lower finding support on the 50 day ma before rebounding. Moves higher this week have been capped by the 2 week descending trend line.  

The price is on the rise. Any meaningful recovery will need to break above the trendline at 15650 in order to retest the all time high at 15800. 

Still, the MACD is keeping sellers hopeful. Any move lower needs to break through the 50 sma at 15400. A move below 15250, Monday’s low .


How to trade with City Index

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade.
 


More from Trade Ideas

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.