EURUSD and German 30 Index

Markets start the week in narrow ranges but Asian equities are holding onto the gains they made overnight. Earnings season got off to a fine start on Friday with US Banks posting gains and helping to propel the indices to new highs for the year. The US equity markets are back to within touching distance of their all-time highs and a solid earnings season might produce a breakout above these levels. Reports that the US has made concessions on the trade negotiations with China, including rolling back demands that China reduce state subsidies. The US has made progress on intellectual property protection and opening access to Chinese markets. FX markets are having a quiet start to their week as traders face Easter holidays around the coming weekend.

The economic calendar will be focussed on Central Bank speakers and data through much of today. The German Bundesbank Monthly report will be released later this morning. In the afternoon US FOMC Member Evans will be speaking. The US Empire State Manufacturing Index will be released around the same time with a forecast of 8.1 versus 3.7. The Bank of Canada Business Outlook Survey will be released later in the afternoon, followed by UK MPC Member Haskel’s panel participation in London.  The evening, US FOMC member Evans will speak in New York.

EURUSD

The EURUSD pair has broken above its long challenged resistance trend line once again last week and is looking to engage the lower high this produced at 1.1324. A break above this level may target the 1.1400 level and the 1.1420 area, followed by potential resistance around the 1.1450 level and the lower high. A push above the 1.1500 area opens up the 2019 high at the 1.1570 area, with a firm move past this area shifting focus towards the 1.1800 zone as a potential target on a breakout higher.

Support for the pair at the broken trend line comes into play today around 1.1272. Below this the 1.1216/1.1200 area may be used to support price but a loss of this area may entice sellers to possibly target lower levels around 1.1500. Traders may look to a test on the lower support trend line around 1.1066 as their short term objective, if the 1.1100 level is broken. Further support might accumulate around the 1.1000 level, which may attract interest as a large round number.

Germany 30 Index

The Germany 30 Index has held resistance-turned-support around the 11855.00 area last week and has tested resistance now at 12030.00. A break higher from this area may seek to engage with the rising resistance trend line around 12100.00. Above this area, the 12194.00/12200.00 area may be resistive to further advances. The 12450.00 area holds the key to 12500.00 beyond, with further drives higher potentially targeting the 12700.00 area.

Support around the 11855.00/11835.00 area may hold price up in the short term, but a determined pullback may result in a break below this area with a view to targeting the 11500.00 area and the rising support trend line. A loss of this trend line may trigger fresh short positions as the rising wedge pattern breaks down, but support at 11320.00 may need to be broken to confirm the pattern. The falling support trend line around 11120.00 may be used as support in conjunction with the 11000.00 area. A sell-off opens up the lows at 10578.00 and 10280.00 to retests.

 

 

Phillip Konchar

Core Spreads

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