Two trades to watch;: FTSE, EUR/USD

Close-up of market chart
Fiona Cincotta
By :  ,  Market Analyst

FTSE rises after China property plan but can it last?

The FTSE is set to open modestly higher at the start of the week in cautious trade, boosted by news of the China property rescue plan.

Beijing unveiled a plan to rescue the ailing property market. The 16-point plan is the most comprehensive package yet to bail out the troubled sector. Developer stocks have surged on the news, and the Hang Seng teetering is on the brink of a bull market.

Still, COVID cases are also on the rise as winter approaches, raising some concerns over the country’s zero-COVID outlook.

While there is no UK data today, there is plenty due across the week, including UK unemployment, CPI, and, of course, the Chancellor’s budget on Thursday. Traders are cautious ahead of Jeremy Hunt’s fiscal statement, where he is expected to announce tax rises and spending cuts to fill a £50 billion black hole.

Where next for the FTSE?

The FTSE ran into resistance at 7430 and has eased lower. The price is testing the 200 sma support at 7325. The RSI remains in bullish territory, supporting further upside. Should buyers successfully defend the 200 sma, the price could rise towards 7515 the September high.

Should the 200 sma support fail to hold sellers could look to test 7300 the multi-week rising trendline, ahead of 7245 the rising trendline dating back to early March. A fall below here would also create a lower low.

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EUR/USD slips after Fed Waller’s comments

EUR/USD is heading lower at the start of the week, paring some of last week’s 4% rally. While cooler than expected, US inflation pulled the USD sharper lower last week, comments from Federal Reserve President Christopher Waller have lifted the USD in early trade.

Waller warned that interest rates could continue rising despite cooling inflation. He said that the that there is a way to go before rate hikes are done and that the focus should be on the terminal rate not the pace at which hikes are carried out.

The more hawkish commentary was in contrast to the less hawkish stances adopted by Fed President Mary Daly and Patrick Harker last week.

Attention will now turn to Eurozone industrial production, which is expected to rise 0.3% MoM in September, up from 1.5% in August.

Where next for EUR/USD?

EURUSD is easing back from 1.0365, the three-month high hit last week. The pair continues to hold over 1.03, and the RSI is in bullish territory, supporting further upside while it remains out of overbought territory.

Buyers will look to take out 1.0365 to expose the 200 sma at 1.0430, ahead of 1.0625 the mid-June high.

Meanwhile, sellers could look for a move below 1.02, the September high for further losses towards 1.0100, the October high.

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