Two trades to watch: EUR/USD with Fed in focus, Dixons Carphone H1 results

EUR/USD eyes YTD high 1.2175 ahead of Fed rate decision Dixons Carphone reports strong rise in H1 profits, 120p draws into focus

FED 4

EUR/USD: will Fed & Congress help pair break 1.2175?


• Euro could ignore gloomy Eurozone PMIs
• The FOMC is the key risk event today, US retail sales also in focus
• Fed expected to stay on the side lines waiting for developments from vaccine roll out & Congress over stimulus
• Would need to cast doubt over easy policy for longer to bounce the USD

EUR/USD has been trading in a firm uptrend since early November. However, it has failed to push beyond its YTD high of 1.2175 despite several attempts through December. The pair trades above its 50 & 100 sma on 4 H chart indicating that there is still buying interest. The move higher is also supported by momentum as the RSI trends higher. 

Another test of resistance at 1.2175 could see a break-through propelling the pair to 1.22 an important level from 2018 prior to 1.2310 and 1.2420 levels last seen in early 2018.

On the flip side, a move below 50 sma at 1.2130 could see the pair head back towards 1.2085 horizontal support and 1.2050 where 100 sma and horizontal support converge. This would then bring the 1.20 level into focus.

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Dixons Carphone continues rally as profits rise

• Electrical retailer reported strong rise in H1 profits with strong online performance
• Pre-tax profit of £45 million vs £86 million loss same period last year
• Trading strong 6 weeks to 12 Dec LFL sales +16%

Dixons Carphone has rallied over 100% since its Mid-March lows. After trending lower across June and July, a series of higher high and higher lows has been in place since early August. After hitting an 8 month high of 121p in November the price has eased back finding support on the ascending trend line at 101p last week. 

The price trades comfortably above 100 day sma and is testing the 50 sma. Meanwhile the RSI which had be sloping lower is now pointing northwards.

A move above 50 sma could see Carphone Dixons test horizontal resistance at 110p prior to 121p (Nov high) and 130p. Meanwhile a move below the 50 sma could see the share price test the ascending trend linee support at 102p, prior to 100 sma support at 97p.

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