Two Trades To Watch: FTSE, USD/JPY

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FTSE edges lower as more Russian sanctions are expected. USD/JPY looks to US ISM services PMI, Fed speakers.

FTSE edges lower as more Russian sanctions expected

The FTSE, along with its European peers are edging a few pips lower on Tuesday, after mild gains in the previous session.

Stocks are trending lower as the European Union and the US prepare to apply more sanctions on Russia for the atrocities committed against civilians in Ukraine.

Rising oil prices could keep oil majors supported

Looking ahead, UK services PMI will be in focus. This is the second reading so not as market-moving as the first. Expectations are for the services PMI to confirm 61 in March, up from 60.5 in February.

Where next for the FTSE?

The FTSE extended its rebound from a low of 6760 at the start of the month, rising above its 50 & 100 sma and running into resistance at 7600.

The index is edging lower in consolidation mode, capped on the upside by 7600 and on the lower side by 7485. The RSI remains above 50 suggesting that more upside is still on the cards.

Sellers would need a move below 7485 to expose the 50 sma at 7430 and the 100 sma at 7385.  Move bellow 7310 horizontal support could negate the near-term uptrend.

On the upside, buyers could look for a move over 7600 to bring 7690 the post-pandemic high into focus.

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USD/JPY looks to US ISM services PMI, Fed speakers

USD/JPY is falling on Tuesday after 3 days of gains. The pair fell from a high of 122.85 after BoJ governor Haruhiko Kuroda confirmed that the central bank would continue with its loose monetary policy but also said that he expected inflation to rise further which could hurt the Japanese economy.

The Japanese yen is also finding some support from safe-haven flows, as equities edge lower.

Meanwhile, the US Dollar is edging lower versus its major peers after strong gains yesterday. Investors are looking ahead to the ISM services PMI which are expected to rise in March to 58 up from 56.6.

There are also plenty of Fed speakers due to hit the airwaves. More hawkish commentary from the Fed could further lift expectations of a 50-basis point rate hike in May. This would highlight central bank divergence and could lift USD/JPY.

Where next for USD/JPY?

USD/JPY rose firmly from 115 to 125.10 across March. The price has since eased lower and is trading in a holding pattern capped on the upside by 132.00 the March 30 high and on the lower side by 121.20.

The receding bullish bias on the MACD suggests that there could be some downside on the cards, which would also bring the RSI out of the overbought territory. Sellers would look for a move below 121.20 to expose the 20 sma at 120.45 and bring 119.50 into target.

Meanwhile, the long lower wick on the candle suggests that there hasn’t been much acceptance for USD/JPY at the lower prices. Buyers could look for a move over 123.00 to bring resistance at 124.30 into play ahead of 125.00 the 6-year high.

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