Two Trades To Watch: EUR/GBP, FTSE - Tuesday, May 4
EUR/GBP looks to UK manufacturing data. FTSE tests 7000.
EUR/GBP looks to UK manufacturing PMI data
The Pound is supported by reopening optimism. However, DUP leadership elections in Northern Ireland will keep Brexit issues firmly in the spotlight.
France recently rejected the UK’s post Brexit provisional changes to the post Brexit fishing license.
Euro is under pressure amid broad US Dollar strength, although the easing of travel restrictions over the summer could underpin the Euro.
UK manufacturing PMI expected to confirm 60.7 preliminary April reading (FXE, FXB).
Where next for EUR/GBP?
EUR/GBP trades above its ascending trendline dating back to early April. However, it continues to struggle to push above 0.8720 for the past few weeks remaining in a relatively confined range.
The pair trades just below the 20 & 50 EMA and the RSI is supportive of further losses.
Any move southwards needs to break below the ascending trendline at 0.8670, today’s low, to open the door to a deeper selloff to 0.8590 the low April 19. From here 0.8500 round number could come into play.
On the flip side any move higher would need to break out above 0.8720 to then look towards 0.8780 the February 11 high.
FTSE struggles around 7000
Optimism surrounding the reopening continues to support the FTSE, travel stocks could be in focus as some foreign travel is due to begin on 17th May and as EU unveils plans for overseas tourists.
Oil is edging lower amid concerns over the COVID crisis in India which could drag on oil majors.
Where next for the FTSE?
The FTSE looks set to edge higher on Tuesday, building on 0.45% gains from the previous session.
The FTSE trades above its ascending trendline dating back to early February, it also trades above its 20 & 50 EMA suggesting a bullish trend. The RSI is also supportive of further gains over 60 and pointing mildly higher.
A break over 7000 is needed in order for the index to look towards resistance at 7050 the trendline. However, given the high levels of indecision at this level a break higher looks questionable.
Support can be seen at 6920, the 20 EMA which could trigger follow through selling. It would take a move below the 6850 the confluence of the 50 EMA and the ascending trendline to negate the current uptrend.
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