Two trades to watch: EUR/USD, FTSE
Fiona Cincotta January 25, 2021 3:56 PM
EURUSD looks towards 1.22 ahead of German IFO business sentiment data FTSE trends cautiously higher on US stimulus hopes
EUR/USD rises ahead of German IFO data
The EUR/USD is edging higher towards 1.22 on a broadly upbeat market tone and weaker US Dollar ahead of German IFO business sentiment data.
EUR/USD technical analysis
After breaking out of the descending channel pattern late last week, EUR/USD rose to a 10 day high of 1.22 but lacked follow through. Today the pair is trading quietly in consolidation ahead of the data release at 1.2180.
Bulls could wait for a break above 1.22, the 100 sma and round number before taking a position. A break abovethis level could open the door to 1.2235 (high 13th Jan) and a break through here could see the pair push on beyond 1.23 resuming the ongoing longer term upward trend.
On the flip side 1.2130 (50 sma) offers immediate resistance ahead of 1.21. A brsk below this level could see 1.2050 come into play before the key 1.20 psycological level.
FTSE rises cautiously on US stimulus hopes & ahead of big US earnings week
The FTSE is edging cautiously higher on US stimulus optimism. Hopes are rising that $1.9 trillion covid stimulus package be pushed through Congress in the coming weeks. This is lifting risk sentiment making riskier assets like stocks more attractive. The deal would also be a boost for London listed companies that do business with the US.
The UK earnings calendar is relatively quiet this week but earnings from US tech giants such as Apple, Facebook, Tesla and Microsoft could still impact the FTSE 100.
UK retailers will be in focus following news that Boohoo will acquire the Debenhams brand and website.
FTSE technical analysis
The FTSE is trading below its 50 and 100 sma on the 4 hour chart and also below the descending trendline dating back to early January.
The RSI is also trending lower and remains below 50 pointing to further weakness. However, the longer term ascending trendline remains in tact.
A break out over 6742 the 50 sma and the descending trendline is needed to negate the current short term bearish trend. Beyond there look for horizontal resistance at 6810.
On the downside support can be seen at 6650 (Friday’s low) prior to 6600 round number & swing low 5th January.
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