EUR/USD, FTSE Forecast: Two trades to watch

EUR/USD falls after German GFK consumer confidence drops

• GFK consumer confidence falls to -24.7 from -22.6
• USD is rising, but gains could be limited amid weak data
• EUR/USD remains below 1.0530 resistance

EUR/USD is falling, snapping a two-day winning streak as the USD recovers, tracking higher treasury yields.

The USD index has risen to 106.50, with the 2-year and 10-year treasury yields also advancing. However, gains in the USD could be limited after a slew of weaker data. Yesterday, US consumer confidence fell by 7 points, marking its third straight monthly decline while dropping to an almost four-year low.

Meanwhile, Richmond Fed President Thomas Barkin sees Core PCE cooling further this week as the Fed continues to make progress on controlling inflation. However, he still sees the need for a wait-and-see approach. The US economic calendar is relatively quiet today with new home sales. Tomorrow, US GDP and Friday's core PCE data will take centre stage.

The EUR found support earlier this week from optimism surrounding the German elections and the prospect of a €200 billion emergency defence fund.

Meanwhile, data from the eurozone’s largest economy has been less encouraging, with the Q4 GDP confirming a -0.2 % QoQ contraction. Today’s GFK consumer confidence was also weaker than expected, falling to -24.7 in March from -22.6 in February and defying expectations of a rise to -21.

The weak data comes ahead of the ECB meeting next week, at which the central bank is expected to cut rates by a further 25 basis points.

EUR/USD forecast – technical analysis

EUR/USD has extended its recovery from the 1.02 February low, rising above the 50 SMA, but has failed to rise above 1.0530, the level it needs to break above to create a higher high. A rise above here, supported by the RSI above 50 brings 1.06 into focus.

On the downside, support is at 1.0450 round number and 1.0390, the 50 SMA.

FTSE 100 rises as PM lifts defence spending

• Defence spending will increase to 2.5% of GDP by 2027
• Aston Martin falls 9% after reporting a full-year loss
• FTSE extends recovery from 8613

The FTSE 100 opened higher on Tuesday after UK Prime Minister Kier Starmer revealed plans to increase defence spending, boosting defence stocks.

PM Starmer said he would increase the annual spending to 2.5% of GDP by 2027 to offer more support to Europe amid Ukraine peace talks. His announcement came ahead of a meeting with President Trump in Washington, where Ukraine will be a key focus of the discussion.

On the corporate front, Aston Martin Lagonda reported a mixed set of final results. A stronger second-half sorry generated positive cash flow in the final quarter; however, it still reported an overall loss and a larger debt pile. Across the year, health, all volumes fell 9% to 6030 owing to supply chain disruptions and weaker demand in China. That said, volumes rose 8% in the fourth quarter amid deliveries of a new core product range. Full year revenue dropped 3% to 1.58 billion after things fell 11% as the company reported an operating loss of 100 million.

Elsewhere BP will be in focus see energy giant is expected to announce that it will cut its renewable energy investments and focus on increasing oil and gas production. BP will outline its strategy after pressure from some investors unhappy about recent profits and the share price which is underperformed rivals.

UK comic calendar is quiet today. Bank of England's Dhingra will speak later. Dhingra voted to cut rates by 50 basis points in the February meeting and said in a speech yesterday that policymakers don't have a consensus over how fast the central bank should be cutting interest rates even though they all used the word gradual, which could be around 25 basis points per quarter.

Looking ahead to the US session, the US economic calendar is quiet but eyes will be on Nvidia's results after the close, which could affect broader market sentiment.

FTSE 100 Forecast - technical analysis

After falling back from its all-time high of 8841, the FTSE found support at 8613 and rebounded higher. The uptrend remains intact, with the price trading above its rising trendline dating back to December 20 and above its 50, 100 & 200 SMA.

Buyers will look to extend gains towards 8800 and 8841 to create a higher high and fresh record level.

Support can be seen at 8613, last week’s low. Below here, the rising trendline support is at 8550 ahead of 8480.