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EUR/USD rises on hopes the US government could reopen soon, EZ sentiment data weakens

EUR/USD has recovered from its recent multi-month low, rising above 1.16 to its highest level since October— amid optimism over the end of the US government shutdown and ahead of a slew of ECB and Fed speakers across the week.

On Sunday, the US Senate moved forward on a measure to reopen the federal government and end the shutdown, with President Trump saying that the shutdown was closer to an end. Safe havens such as the Japanese yen and the US dollar were under pressure, whilst riskier currencies such as the AUD and GBP were pushing higher. The improved market mood was also helping the EUR.

The ending of the US government shutdown means attention would return to U.S. economic data. Last week, the Challenger job report showed 153,000 job cuts in October, marking the highest level for that month in 2 decades. The market is currently pricing in around a 66% probability of a Fed rate cut in December, up from 62% a week ago.

Attention will be on Fed speakers this week for further clues on the likelihood of another rate reduction next month.

Attention is also on ECB officials who speak this week. The ECB is widely expected to leave interest rates unchanged for the foreseeable future, given that inflation is tracking near 2% and the eurozone economy shows signs of resilience. Money markets are only pricing in a 45% likelihood of a rate cut by September 2026. While some ECB officials have emphasised caution, the focus will remain on growth.

On the data front, the eurozone Sentix investor confidence index dropped to -7.4 in November, from -5.4 previously. This deterioration in sentiment suggests there may not be an autumn economic upturn. That said, recent PMI data has been encouraging. Business activity last week reached a multi-year high.
 

EUR/USD forecast – technical analysis

After running into resistance at 1.1920 in mid-September, EUR/USD rebounded lower. It trades within a falling channel. The price ran into support at 1.1470 and has recovered higher to 1.1570 at the time of writing.

Should the recovery continue, buyers will look to rise above the 50 SMA at 1.1670 and 1.17 to create a higher high.

However, failure to rise out of the falling channel could see the price extend its downtrend. A break below 1.1470 creates a lower low, bringing 1.14 into focus.

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FTSE 100 rises on hopes of an end to the US government shutdown

If it's a long with its European pairs are heading higher amid hopes of an end to the US government shutdown, which is boosting risk sentiment at the start of the week. While the FTSE is approaching record highs, it is rising at a slower pace than its European peers owing to the lack of tech stocks.

Diageo is topping the leaderboard, up 7% after naming former Tesco chief Dave Lewis as its new CEO. Investors are seeing this as an opportunity for a cultural reset amid a tricky time for the firm.

Fresnillo was also surging, tracking Gold prices higher. The precious metal has rallied by almost 2% in early trade as investors turned their attention back to Federal Reserve rate-cut expectations following weak Challenger job-cut data last week.

Miners are also performing well after Chinese data over the weekend showed that inflation ticked higher to 0.2% YoY in October, up from -0.3% in September.

Amid the risk of mood defensive stocks were underperforming, with names such as BT, National Grid, and BT falling.

The UK economic calendar is quiet today. However, attention will turn to UK unemployment figures tomorrow, which are expected to show unemployment rose to 4.9%. Q3 GDP data is due later in the week.
 

FTSE100 forecast - technical analysis

The FTSE 100 trades within a rising channel as it moves towards its record high. The RSI supports further gains as long as it remains out of overbought territory.

Buyers will look to rise above 9800 to fresh record highs. A break above here and the upper band of the rising channel brings 9900 into focus,

Support is seen at 9690, but it would take a move below 9570 to create a lower low and expose the 50 SMA at 9435.
 

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