- July 7, 2021
- Posted by: Analysis Team
- Category: FOREX, Technical Analysis
The euro wavered today after the relatively weak German industrial production data. According to Destatis, the country’s factory output declined by 0.3% in May as the auto industry continued facing a major chip shortage. The sector has declined in the past five consecutive months. Energy production also declined while foreign orders for manufactured goods fell by 6.7%. The currency also declined as the number of coronavirus cases in some countries like Spain and France kept rising. Meanwhile, the European Commission expects that the Eurozone economy will rise by 4.8% this year and 4.5% in 2022. It expects that the economy will go back to pre-pandemic levels in the fourth quarter.
The British pound was also little changed after the relatively weak UK house price index. According to Halifax, the country’s house price index (HPI) declined by 0.5% in June after rising by 1.2% in May. The prices rose by 8.8% on a year-on-year basis. The small month-on-month decline was mostly because the government has started winding down the attractive stamp duty waiver. The trend is expected to continue since the government is expected to wind down the furlough program in the next few months. The currency is also wavering as investors reflected on the upcoming reopening of the UK economy. Some analysts warn that the reopening will lead to more Covid cases and a slower recovery. Indeed, data released today showed that consumers bought less in shops, bars and restaurants in June.
Global stocks tilted upwards as the US bond yields retreated. The 10-year bond yield fell to 1.343%, the lowest level in four months. The 30-year, on the other hand, declined to 1.973% ahead of the latest FOMC minutes. The minutes will provide more details about the deliberations that happened during the previous meeting. In Europe, the DAX and FTSE 100 indices rose by more than 0.50% while in the US, the Dow Jones and Nasdaq 100 futures rose by 0.10% and 0.60%, respectively. The top movers today were Wise, the fintech company that made a direct listing at the London Stock Exchange. The company was valued at more than $10 billion. Chinese stocks like Alibaba and Didi continued to decline as the country continued its crackdown.
The EURUSD was little changed as investors waited for the latest FOMC minutes. The pair is trading at 1.1820, where it has been in the past few days. The pair is also close to its lowest level since April this year. It has also moved below the 25-day moving average while the MACD is below the neutral line. The pair is also below the important support at 1.1845, which was the lowest level on June 18. It has also moved below the 25-day moving average. The pair will likely break out lower as bears target the next support at 1.1750.
The EURGBP pair declined sharply today. It fell to a low of 0.8550, which was lower than the intraday high of 0.8523. The pair moved below the 25-day and 15-day exponential moving averages (EMA). It is also between the descending channel shown in yellow. The Awesome Oscillator and the MACD have also moved below the neutral level. Therefore, the pair may keep falling as bears target the next key support at 0.8500.
The FTSE 100 index rose after the successful direct listing by Wise. The index rose to £7,150, which was substantially higher than last week’s low of £7,068. On the four-hour chart, the index is below the important resistance level at £7,165. It is also between the middle and upper line of the Bollinger Bands. The index will likely keep rising with the next key target being at £7,165.