CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Two trades to watch: EUR/USD, FTSEMIB

Article By: ,  Senior Market Analyst
July 21, 2022 8:20 AM

EUR/USD rises ahead of the ECB rate decision

EURUSD is on the rise, lifted by optimism as gas flow returns to Nord Stream 1 and investors look ahead to the ECB rate decision.

After ten days of maintenance, Russia switched back online Nord Stream 1 gas flow to Germany, calming fears that the gas would remain offline, tipping Germany into recession.

Attention now turns to the ECB, which is expected to hike rates for the first time in 11 years. The central bank had pre-committed to a 25 basis point rate hike. However, the picture has changed since then, with inflation hitting a new record high and EURUSD dropping to parity importing inflation.

The money markets are pricing in a 70% chance of a 50 basis point hike. However, analysts are less confident, with most surveyed by Bloomberg expecting a 25 basis point hike, which could disappoint the market and pull the EURUSD lower.

Where next for EUR/USD?

EUR/USD is extending its rebound from the 2022 low of 0.9952 and is running into resistance at the 20 sma at 1.0260. The bullish crossover on the MACD keeps buyers hopeful of further upside.

Buyers need to retake the 1.0260, the 20 sma, and the weekly high in order to rise towards resistance at 1.0350, the May low. A move above here exposes the 50 sma ahead of 1.06, the late June high.

Failure to retake the 20 sma could see the price head back towards parity and the 2022 low.

 

FTSE MIB falls as Draghi looks set to resign

The FTSE MIB is falling after Prime Minister Mario Draghi is set to resign. The Italian leader won a vote of no confidence. However, the vote was sat out by three coalition parties, setting the stage for his resignation.

The latest events bring to an end a period of relative political stability in Italy, destabilising the eurozone’s third-largest economy. A snap election is now highly likely. The next government could bring together a group of nationalists and center-right, including some that hold Eurosceptic views.

Where next for the FTSE MIB?

The FTSE MIB has been trending lower since the start of the year, falling to a low of 20146.

The price trades below the 50 & 20 sma, after failing to meaningfully capture the later earlier this week. However bullish RSI divergence suggests that the downward move could be running out of steam. Sellers will look for a move below 20146, the 2022 low to open the door to 20000 psychological level and 19000 the August 2020 low.

Buyers will look for a move over 21840 the weekly high to create a higher high and expose the 50 sma at 22665.

 

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024