Photo by Nicholas Cappello on Unsplash
 

FTSE rises ahead of a potential backtrack? EUR/USD looks to US retail sales.
 

FTSE rises ahead of a potential budget backtrack?

The FTSE and its European peers are rising after solid gains on Wall Street yesterday.

The Chancellor has flown back from the IMF meeting earlier, fuelling speculation that a U-turn from the Chancellor could be on the cards.

The BoE is so far sticking to its guns over a deadline today, which drove pensions to shore up their positions, selling bonds to the central bank. #

What happens next? For this stability to hold, the Chancellor will need to come out with something today. Otherwise, without a backstop from the BoE and no news of a U-turn from the Chancellor, the sell-off in the bond market is likely to continue on Monday.

Expecting the market to hold quietly until the Halloween budget is not realistic.
 

Where next for the FTSE?

The FTSE has traded broadly within a falling channel. After rebounding from 6700, the 2022 low, the price rose to a high of 6960. However, the long upper wick suggests there wasn’t much appetite for the higher price.

The RSI is below 50 supporting further downside.

Sellers will look towards 6770, the March low, with a break below here, opening the door to 6700.

On the flip side, buyers will focus on a move over 7000 to bring resistance at 7100 into play, the October high, and create a higher high.

(Click on image to enlarge)

EUR/USD looks to US retail sales

EUR/USD rallied 0.7% yesterday despite hotter-than-expected US consumer inflation data, which cemented a 75 basis point hike from the Federal Reserve in November.

After a brief spike, the USD fell which could be attributed to the fall in yields as the global bond market picked up amid developments in Westminster.

Today the focus is on US retail sales, which are expected to show that the US consumer remains resilient despite rising prices and a deteriorating economic outlook. Sales are expected to be 0.2% MoM in September after rising 0.3% in August.

University of Michigan confidence is also due to be released and shows a slight improvement rising from 58.9 to 59.
 

Where next for EUR/USD?

EUR/USD continues to trade below its 20 & 50 sma and falling trend line resistance. The price has rebounded from yesterday’s low and is currently trying to rise above the 20 sma resistance and multi-week falling trendline resistance at 0.9785. The RSI is below 50 but only modestly.

Buyers will need to rise above 0.9785 to expose the 50 sma at 0.9945, bringing parity back into play. It would take a move over 1.00 to create a higher high.

On the flip side, sellers will look for a move below 0.9630, yesterday’s low, to expose 0.9530, the 2022 low.

(Click on image to enlarge)

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