Two trades to watch: FTSE as Brexit endgame nears, EUR/USD ahead of US data dump
Fiona Cincotta December 23, 2020 5:22 PM
EUR/USD moves higher as 50 sma on 4 hour chart holds. 1.22 draws into focus. FTSE is under pressure on the back of a stronger pound. Resistance seen at 6450
What next for EUR/USD ahead of jobless claims, durable goods & PCE?
• EUR/USD is rebounding as investors react to news that UK Prime Minister Boris Johnson and EC President Ursula von der Leyen talked on the phone to move Brexit trade talks forward.
• Secondly France has reopened the border with the UK for freight, allowing truck drivers to deliver goods on condition of a negative covid test.
• US Dollar is trending lower despite Trump raising doubts over whether he will sign the covid rescue package agreed by Congress.
• A slew of US data will be in focus, including jobless claims, personal spending and income numbers and durable goods orders.
On the 4 hour chart, EUR/USD failed to cling onto gains above its 20 sma, however the 50 sma at 1.2180 is holding. The bullish 100 sma is also offering support around 1.2120.
A move back over 50 sma at 1.2080 could see today’s high at 1.22 tested prior to a move towards 1.2250 and the 2020 top of 1.2273.
On the flip side, immediate support is seen at 1.2150 today’s low, prior to 1.2120 100 sma. A break-through here would negate the medium term bullish trend opening the door to 1.2050 9th December’s low.
FTSE 100 Brexit & covid stocks in focus
The FTSE has opened the day lower, lagging its European piers thanks in part to the stronger pound, which has risen on Brexit optimism. Reports of concession from the UK over fishing could help a trade deal across the line.
Stocks to watch: Brexit stocks will be in focus, such as UK banks such as Lloyds and Barclays, in addition to Covid stocks such as Rolls Royce, IAG and Ocado.
The FTSE sold off sharply falling through its 20 and 50 sma on the 4 hour chart on Monday before rebounding off 6300 round number support. The rebound has stalled as the index has so far failed to push above the 20 sma resistance both yesterday and today. Failure to break above this level would confirm the bearish bias and could see the FTSE head back towards 6300
A move above this level at 6450 could see the FTSE attack its 50 sma and this week’s high at 6515 before aiming towards 6600.
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.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital 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), GAIN Capital Singapore 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 GAIN Capital Singapore 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 GAIN Capital Singapore 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.
GAIN Capital Singapore 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.