Certainly. Below is a rewritten and expanded version of the original article from Investing.com titled “EUR/USD, FTSE 100 Forecast: 2 Trades to Watch” by Razaqzada. This version is restructured for clarity, includes expanded analysis, and reaches the target of 1,000 words.
Original article by: Fawad Razaqzada (Investing.com)
Rewritten & Expanded Version:
EUR/USD and FTSE 100 Weekly Outlook: Technical and Fundamental Levels to Watch
Market participants resumed trading with growing caution at the start of the week. Amid recovering fears of persistently elevated interest rates and a stronger dollar, key instruments like the EUR/USD and the FTSE 100 are facing major technical and fundamental crossroads. Despite signs of optimism earlier in the month, this renewed market anxiety has shifted focus back to U.S. monetary policy, mainly driven by economic resilience and the slow pace of disinflation.
A closer inspection of two key instruments shows clear technical signals that demand attention. This week, we provide an in-depth analysis of the EUR/USD currency pair and the FTSE 100 index. Both of these assets offer compelling setups, each aligned with current macroeconomic themes that traders should be closely monitoring.
1. EUR/USD Approaching Technical Inflection Point
The EUR/USD pair has been a focal point in the forex space over the last few weeks due to mixed economic signals from both the Eurozone and the U.S. After a brief rally attempt earlier this month, the pair has resumed its downward grind in the face of a strengthening U.S. dollar. Over the past few trading sessions, the dollar has drawn support from robust retail sales data and hawkish remarks from Federal Reserve officials. In contrast, the euro’s upside has been limited by macroeconomic weakness in Germany and political uncertainty in France.
Technical Overview
Key daily chart observations indicate a neutral to bearish tone for the short term:
– Price Action: The EUR/USD remains under pressure around the 1.0700 handle after failing to sustain above resistance at 1.0850, which coincides with the 200-day moving average (MA).
– Support Level: Strong horizontal support lies at 1.0660, where prices have previously rebounded in March and May. A break below this level could open the door to 1.0600 initially, followed by the year-to-date low near 1.0500.
– Resistance Levels: The area between 1.0850 and 1.0880 offers formidable technical resistance. In order for bulls to regain control, the pair must establish traction above this zone.
– Momentum Indicators: Relative Strength Index (RSI) is hovering near the 45 mark, indicating muted momentum. This aligns with the current sideways consolidation phase.
Fundamental Influence
From a fundamental perspective:
– The dollar is benefiting from the shift in market pricing surrounding Federal Reserve rate expectations. While inflation has cooled compared to prior months, core services inflation and strong labor market data indicate the Fed may not cut as aggressively as previously anticipated.
– On the euro side, the European Central Bank (ECB) has already started to cut interest rates, and forward guidance suggests more easing may follow. ECB President Christine Lagarde has expressed caution, but growing political instability in France and weak output in Germany could force a dovish tilt.
Trade Setup: EUR/USD Breakout Strategy
Given the above analysis, traders may find it prudent to watch for a breakout from the current trading range:
– Entry Strategy:
– Long position on a confirmed daily close above 1.0880 could signal further upside. A break may target 1.1000 in the coming weeks.
– Short position activated on a break below 1.0660, targeting 1.0600 and then 1.0500.
– Stop Loss:
– For long trades, consider a stop around 1.0790 to limit downside.
– For shorts, a stop could be placed above
Read more on EUR/USD trading.