FTSE gains on commodity rally, HSBC results. US Dollar Index searches for direction ahead of Fed Chair Jerome Powell's testimony.

FTSE gains on commodity rally, HSBC results
 

FTSE is on the rise, helped by a rally in commodities as base metals rise on the back of global recovery hopes and supply challenges.

HSBC posted better than expected earnings (HSBC).

UK unemployment 5.1% in 3 months to December. Claimant Count -20k vs +35k exp. Average earnings 4.7% vs 3.7% Nov & 4.2% expected. The stronger pound could limit gains on FTSE.

Where next for the FTSE?

The FTSE is rebounding after falling lower in the previous session. It trades +0.3% at the time of writing The price picked up off the ascending trendline support on Monday. However, the RSI is neutral at 50 and the 200 & 50 sma are flat indicating a neutral bias.

The price is currently testing the 50 & 200 sma on the 4 hour chart at 6640.

A break above this level could bring resistance at 6750 into play high 18th February ahead of February’s high at 6800.

Should the price fail to break above the 50 & 200 sma the price could fall back to 6590 the ascending trendline support before testing 6545 the low from 22nd Feb.

US Dollar looks for direction ahead of Fed Jerome Powell’s testimony

After three days of losses the index is challenging support at the psychological level of 90.00

The reflation trade dominates market sentiment helped by the strong vaccine rollout and optimism surrounding a strong economic recovery. 

Although the DXY appears to have ignored rising yields which hit 1.40% for first time in a year.

Attention turns to Fed Jerome Powell's bi-annual testimony before Congress.

Where next for the US Dollar Index?

The US Dollar is attempting to recover from a pullback overnight to a low of 89.94 in the Asian session (UUP).
It trades below its 50 & 200 sma, the 50 sma crossed below the 200 sma in a bearish signal and the RSI is also supportive of further losses until it reaches oversold territory.

Today’s low of 89.94 and January 13th low of 89.92 offers immediate support and could prevent further losses in the DXY. Beyond here 89.70 low 8th January could also offer support. A move through here to 89.20 the yearly low can’t be ruled out.

Any attempt at a rebound would need the bulls to break through horizontal resistance at 90.11, support turned resistance (26th January / 16th February). A break through this level could see 90.25 support turned resistance from early Feb pressurize the bulls ahead of the 200 sma on the 4 hour chart at 90.55.