Two trades to watch: GBP/USD, DAX

GBPUSD holds mild gains as unemployment rate declines. DAX drops, German ZEW economic sentiment data due.

GBPUSD holds mild gains as unemployment rate declines

UK labour market data remains strong. 235k jobs were added in July as the economy reopened, up from 183k in June. Although this was slightly short of the 243k forecast.

UK unemployment falls as expected to 4.5%, down from 4.6%. The claimant count came -51.1k lower compared to -58.6k decline in October.

Average earnings including bonuses slipped to 7.2%, down from 8% and slightly ahead of 7%. The data suggests that wage inflation is only easing slightly, meaning inflationary pressures will remain.

Meanwhile the USD is inching lower but still remains around yearly highs as expectations of a move by the Fed is priced in.

Looking ahead the US Dollar will focus on the release of JOLTS job openings. There are currently over 10 million unfilled job vacancies in the US.

Learn more about the Pound

Where next for GBPUSD?

GBPUSD rebounded off 1.3416 in late September and has been extending the move higher. It trades above its multi-week ascending trendline and above its 50 sma on the 4 hour chart.

The price is currently testing the 100 sma at 1.3610. A move above this level, combined with the bullish RSI would keep the buyers optimistic of further gains and a move towards 1.3675 the October high, ahead of 1.3750 the late September high.

On the flip side, support can be seen at 1.3580 the rising trendline  support and 50 sma. A break below here could open the door to 1.3545 last week’s low before bringing 1.3416 back into focus.

GBPUSD Chart

DAX declines, German ZEW economic sentiment data due

The DAX along with its European peers is heading lower in risk off trade. The ongoing global energy crunch is fueling inflation concerns and stagflation fears.

German ZEW economic sentiment data is due to reveal a decline in morale to 24 in October down from 26.5 in September.

Data last week revealed that German industrial production and factory orders were significantly slower than expected amid the ongoing supply chain issues.

Learn more about the DAX

Where next for the DAX?

After hitting an all time high of 16031 in mid-August the DAX 40 has been trending lower. It trades beneath its 50 & 100 sma on the daily chart. The 50 sma is crossing below the 100 sma in a bearish signal.

The price has also slipped below the rising trendline which dates back to the start of the year in another bearish signal. Whilst the RSI is supportive of further downside whilst it remains out of oversold territory.

Immediate support can be seen as 15000, with a breakthrough here opening the door to 14813 last week’s low and 14400 the March 24 low.

Any recovery would need to retake 15200 the trendline resistance, followed by 15300 last week’s high. A move above 15480 is needed for the buyers to attack the 50 and 100 sma at 15620.

DAX chart

 

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