Two trades to watch: FTSE, US Dollar Index

UK GDP upwardly revised, FTSE bulls need a break above 6800. US Dollar index holds 93.00 ahead of Biden's speech & ADP data

Charts (5)

FTSE bulls need to break above 6800 

After a weak handover from Wall Street & Asia the FTSE is pointing to a mildly negative start. 

Elevated US treasury yields continue to sap demand for equities. 

UK Q4 GDP final reading came in better than expected recording 1.3% QoQ growth versus 1% previously. YoY recorded -7.3% versus -7.8% previously. Business investment was significantly better than forecast at 5.6% vs 1.3% previously. 

Where next for the FTSE? 

The FTSE has been trading with a horizontal channel since early March, with the upper band around 6800 and the lower band at 6600. 

The price has managed to claw back to the upper end of the channel, trading above its 20 & 50 sma on the 4 hour chart. The 20 sma also crossed above the 50 sma in a bullish signal. 

The RSI is also showing a mild bullish bias.  

A move above 6800 is key in order for the FTSE to advance towards 6915 the January high and a level which has remained elusive since. 

Failure again to break through 6800 could see the 50 sma tested at 6720. A move below this level could open the door to 6610, it would take a break below here for the sellers to gain momentum. 

 Learn more about trading indices

US Dollar Index (DXY) holds 93.00 ahead of Biden’s speech & ADP data 

The US Dollar index has been well supported over recent sessions as investors bet that the Biden administration’s huge fiscal stimulus, coupled with an aggressive vaccine rollout will help the US economy recovery rapidly from the pandemic. 

US President Biden is due to speak later today, laying out how a $3 - $4 trillion infrastructure plan will be funded. 

Data yesterday revealed that US consumer confidence has soared to the highest level since the start of the pandemic. 

US ADP private payroll report is also due ahead of Friday’s non farm payroll report. Expectations are for a blowout 550k jobs vs 117k in February  

Learn more about the non farm payroll

Where next for the US Dollar Index? 

The US Dollar Index is holding steady at 93.40 in early trade hovering around a level last seen in November last year. 

DXY has broken above its descending trendline dating back to late September, it has also pushed above the 200 sma on the daily chart and pushed above its 2 month ascending resistance trendline, a set up which favours the bulls.  

Any move higher will need to overcome resistance around 94.30 (high Nov 5) and a key resistance of 94.74 the late 2020 high. 

On the fliop side, failure to hold above the trendline resistance at 93.10 could see the DXY attack a crucial support around 92.30 the confluence of the 200 sma and the descending trendline. A break below here brings 92.00 round number into the picture ahead of 91.20 the 50 sma. 

Learn more about trading forex

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.