FTSE falls on deteriorating market mood, China concerns. EUR/USD falls in risk off trade, USD strengthens.
FTSE falls on deteriorating market mood
The FTSE, along with European peers, is slipping lower in risk off-trade. Concerns over tightening lockdown in Shanghai raised fears for the health of the world’s second-largest economy and fuelled fears of global economic growth.
Chinese trade data showed export growth slowed considerably to 3.7% YoY, down from 15.7% in March.
Over the weekend, the G7 unveiled plans for further sanctions on Moscow, including a ban on Russian oil. Rising oil prices are raising the inflation outlook and stagflation fears.
Last week the BoE warned about the economic outlook for the UK, warning of a recession.
There is no high impacting UK data due today. BoE’s Michael Saunders is expected to speak, but the sentiment is likely to be the biggest driver.
Where next for the FTSE?
The FTSE ran into resistance at 7620 last week and rebounded lower, falling through its 50 & 100 sma, which, combined with the bearish RSI, suggests that there could be more downside to come.
Sellers will need to break below 7350, Friday’s low, and 7300, the April low, to continue the bearish trend towards 7180, the February 25 low.
Buyers might be encouraged by the long lower wick on today’s candle, suggesting little acceptance at the lower levels.
Any meaningful recovery would need to rise above 7500, Friday’s high, to negate the near-term downtrend. However, a move over 7620 is needed to create a higher high.
EUR/USD falls in risk off trade, USD strengthens
EUR/USD showed resilience last week but is falling at the start of this week as the market mood sours.
Frightening in Ukraine escalated over the weekend, and the G7 unleashed more sanctions on Russia lifting oil prices to over $110.
Looking ahead, Eurozone Sentix consumer confidence data is expected to show confidence is deteriorating as the cost of loving costs intensifies.
The USD continues to drive higher, boosted by a powerful combination of haven flows and hawkish Fed bets.
There is no high impacting US data due to be released today; instead, all eyes will be on Fed speakers due to hit the airwaves and who are expected to continue the hawkish chorus.
Where next for the EUR/USD?
Rejection at 1.0630 last week’s high, combined with the bearish RSI suggests that the risks are tilted to the downside.
EUR/USD is flirting with 1.05 which bears will need to break below and the 2022 low of 1.0470 in order to continue the bearish trend and head towards 1.04 round number and 1.0360 the January 2017 low.
Bears will need to rise above 1.0630 in order to create a higher high and expose the 20 sma at 1.0680.
Comments
Log in or sign up to join the conversation.