Two trades to watch: EUR/USD, FTSE

EUR/USD falls after German factor orders plunge, EZ consumer confidence due. FTSE rises on cautious optimism.

Charts (6)

EUR/USD falls after German factor orders plunge, EZ consumer confidence due

EUR/USD is falling lower, paring gains from Friday after weaker than forecast German factory data and as Omicron fears ease slightly.

German factory orders dropped -6.9% MoM, well ahead of the -0.5% decline forecast.

Eurozone consumer sentiment is due to be released later and is expected to decline to 15.9 in December as both COVID infections and inflation rise.

The US dollar is gaining ground across the board as Omicron fears ease and bets of a sooner Fed rate rise increase. Mixed non-farm payroll data on Friday haven’t deterred hawkish Fed expectations.

Learn more about the Euro

Where next for EUR/USD?

EUR/USD trades below its 5-week descending trendline. Recent moves higher in EUR/USD have faced rejection at the 20 sma. The pair is once again falling lower after rejection at this support. The RSI is supportive of further downside.

Support can be seen at 1.1236 November 30th low. A break below this level exposes 1.1185 the yearly low.

Buyers will want to see a move over the 20 sma at 1.1335 and 1.1378 the November 30 high, in order to attack the falling trendline resistance at 1.14. Beyond here buyers could be more optimistic of a move towards 1.1465 the November 16 high.

EURUSD chart

FTSE rises on cautious optimism

The mood in the market is one of cautious optimism as Omicron fears ease slightly, helped by comments from US medical advisor Dr Anthony Fauci.

Dr Fauci said that Omicron appears to be less severe as it hasn’t so far fueled a surge in hospitalizations. The US is reportedly reconsidering its travel ban to and from South Africa.

Oil prices are on the price after top exporter Saudi Arabia raised its price per barrel by 80 cents.

There is no high impacting UK data due for release, so Omicron headlines are likely to be the dominant driving force.

BoE Broadbent is due to speak later.

Learn more about the FTSE

Where next for the FTSE?

The FTSE is extending its recovery from 6971 November low. The move above the 100 sma at 7144, combined with the receding bearish bias on the MAC is keeping buyer hopeful.

Bulls will be looking for a close above the 50 sma at 7200 in order to press ahead to 7240 the August high and target 7314 November 26 high.

Failure to hold above the 100 sma could see Friday’s swing low at 7090 tested ahead of 7000 round number.

FTSE chart  

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