Two trades to watch: GBP/USD, Dax
Fiona Cincotta May 18, 2021 2:28 PM
GBP/USD looks towards 1.42 after unemployment rate unexpectedly drops to 4.8% in 3 months to March. Dax rises in line with European peers after on dovish Fed optimism.
GBP/USD looks to 1.42 post jobs data
GBP/USD is gaining for a second consecutive session and trades around a three month high.
UK unemployment unexpectedly declined to 4.8% in 3 months to March, down from 4.9%. The claimant count also unexpectedly declined by 15.1k, expectations had been for a 25k rise.
Re-opening optimism is overshadowing concerns surrounding the Indian variant of covid.
US Dollar weakness is supporting the pair amid more dovish Fed speak cementing expectations that the central bank will keep rates low for longer.
Where next for GBP/USD?
GBP/USD trades within an ascending channel dating back to early April. The pair trades above its 50 & 100 sma on the 4 hour chart and the bullish MACD keeps buyer optimistic.
The pair need to ned break above 1.4170/80 zone, comprising of this month’s high and high February 25th in order to attack the round number 1.42. A break above here could bring 1.4235 the February high and the upper band of the ascending trendline.
On the downside, support can be seen at 1.4060 the 50 sma. A move below here could negate the near term up trend and see the sellers target 1.40 the key psychological level.
Dax set for all new all tine high?
The Dax is rising along with European peers helped by the promise of low interest rates for longer by the Fed.
The markets had been nervous that the Fed could taper support early as inflation jumps higher. However, Fed Kaplan reiterated that he does not see rates rising until next year boosting sentiment.
Looking ahead Eurozone Q1 GDP data, the 2nd reading is expected to confirm -0.6% QoQ contraction.
Where next for the Dax?
After hitting a 6 week low last week, the Dax has powered higher, pushing above its 50 & 100 sma on the 4 hour chart at 15230. The Dax also broke above resistance at 15470 confirming the bullish trend. The RSI is also supportive of further upside.
A move above 15515 is now needed for the index to see a continuation of the upside to fresh all time high.
A move below 15230 could negate the current uptrend and see sellers gather pace.
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