Two trades to watch: EUR/USD, FTSEMIB

EUR/USD rises ahead of the ECB rate decision

EURUSD is on the rise, lifted by optimism as gas flow returns to Nord Stream 1 and investors look ahead to the ECB rate decision.

After ten days of maintenance, Russia switched back online Nord Stream 1 gas flow to Germany, calming fears that the gas would remain offline, tipping Germany into recession.

Attention now turns to the ECB, which is expected to hike rates for the first time in 11 years. The central bank had pre-committed to a 25 basis point rate hike. However, the picture has changed since then, with inflation hitting a new record high and EURUSD dropping to parity importing inflation.

The money markets are pricing in a 70% chance of a 50 basis point hike. However, analysts are less confident, with most surveyed by Bloomberg expecting a 25 basis point hike, which could disappoint the market and pull the EURUSD lower.

Where next for EUR/USD?

EUR/USD is extending its rebound from the 2022 low of 0.9952 and is running into resistance at the 20 sma at 1.0260. The bullish crossover on the MACD keeps buyers hopeful of further upside.

Buyers need to retake the 1.0260, the 20 sma, and the weekly high in order to rise towards resistance at 1.0350, the May low. A move above here exposes the 50 sma ahead of 1.06, the late June high.

Failure to retake the 20 sma could see the price head back towards parity and the 2022 low.

FTSE MIB falls as Draghi looks set to resign

The FTSE MIB is falling after Prime Minister Mario Draghi is set to resign. The Italian leader won a vote of no confidence. However, the vote was sat out by three coalition parties, setting the stage for his resignation.

The latest events bring to an end a period of relative political stability in Italy, destabilising the eurozone’s third-largest economy. A snap election is now highly likely. The next government could bring together a group of nationalists and center-right, including some that hold Eurosceptic views.

Where next for the FTSE MIB?

The FTSE MIB has been trending lower since the start of the year, falling to a low of 20146.

The price trades below the 50 & 20 sma, after failing to meaningfully capture the later earlier this week. However bullish RSI divergence suggests that the downward move could be running out of steam. Sellers will look for a move below 20146, the 2022 low to open the door to 20000 psychological level and 19000 the August 2020 low.

Buyers will look for a move over 21840 the weekly high to create a higher high and expose the 50 sma at 22665.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.