Two trades to watch: FTSE as Brexit endgame nears, EUR/USD ahead of US data dump

Close-up of market chart
Fiona Cincotta
By :  ,  Market Analyst
What next for EUR/USD ahead of jobless claims, durable goods & PCE?

EUR/USD is rebounding as investors react to news that UK Prime Minister Boris Johnson and EC President Ursula von der Leyen talked on the phone to move Brexit trade talks forward. 
• Secondly France has reopened the border with the UK for freight, allowing truck drivers to deliver goods on condition of a negative covid test.
• US Dollar is trending lower despite Trump raising doubts over whether he will sign the covid rescue package agreed by Congress.
• A slew of US data will be in focus, including jobless claims, personal spending and income numbers and durable goods orders.

Technical outlook
On the 4 hour chart, EUR/USD failed to cling onto gains above its 20 sma, however the 50 sma at 1.2180 is holding. The bullish 100 sma is also offering support around 1.2120. 

A move back over 50 sma at 1.2080 could see today’s high at 1.22 tested prior to a move towards 1.2250 and the 2020 top of 1.2273. 

On the flip side, immediate support is seen at 1.2150 today’s low, prior to 1.2120 100 sma. A break-through here would negate the medium term bullish trend opening the door to 1.2050 9th December’s low.  

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FTSE 100 Brexit & covid stocks in focus

The FTSE has opened the day lower, lagging its European piers thanks in part to the stronger pound, which has risen on Brexit optimism. Reports of concession from the UK over fishing could help a trade deal across the line.

The likelihood of the UK moving back into lockdown is rising as new daily covid cases topped 36,000, doubling n a month thanks to the new more infectious strain.
Stocks to watch: Brexit stocks will be in focus, such as UK banks such as Lloyds and Barclays, in addition to Covid stocks such as Rolls Royce, IAG and Ocado.

Technical outlook
The FTSE sold off sharply falling through its 20 and 50 sma on the 4 hour chart on Monday before rebounding off 6300 round number support. The rebound has stalled as the index has so far failed to push above the 20 sma resistance both yesterday and today.  Failure to break above this level would confirm the bearish bias and could see the FTSE head back towards 6300

A move above this level at 6450 could see the FTSE attack its 50 sma and this week’s high at 6515 before aiming towards 6600. 

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Related tags: EUR FTSE 100

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