Two trades to watch: FTSE with earnings in focus, DXY ahead of inflation

FTSE lacks firm direction following range bound session on Wall Street - Earnings and covid developments in focus DXY edges below 90.00 ahead of CPI

Charts (3)

FTSE steady ahead of a slew of corporate update

The FTSE futures are lacking direction ahead of the open taking cues from a range bound session on Wall Street.

Today is a busy day for corporate releases, mainly FTSE250. Just Eat, Persimmon, ASOS, William and Page Group are all due to update the market.

Banks such as NatWest, Lloyds and Barclays could also be in focus following BoE Andrew Bailey’s comments, appearing to talk down the prospect of negative interest rates.

Covid & vaccine developments could drive sentiment

FTSE technical analysis
The FTSE trades within an ascending channel. The price bounced lower off the upper band of the channel around 6910 last Friday and has headed back below the 20 sma in the early part of this week. 

The 50 sma appears to be offering support and the FTSE picked up of 6720 yesterday’s low at 6720.

Bulls should look for a move over20 sma at 6800 to eye a move back towards the upper band of the ascending trendline at 6950 and high 6th January before target the psychological level of 7000.

Bears will be looking for a move below the 50 sma at 6720 to eye a move lower towards horizontal support at 6650 and the lower band of the ascending channel at 6550.

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DXY slips ahead of inflation data

The US Dollar Index reversed from Monday’s high of 90.70 on Tuesday slipping through the key 90.00 level

Dovish Fed commentary on Tuesday, with speakers reassuring that the Fed was not about to start tapering asset purchases anytime soon dragged the greenback lower back through 90.00

The US Dollar had been on the rise in recent sessions following the Democratic sweep. Investors considered that with huge fiscal stimulus coming from the Democrats as the US economy starts to pick up on vaccine progress would boost the economy, spurring more hawkish Fed and lifting the USD.

Inflation data is due later today. CPI is expected +0.4% MoM in December vs 0.2% November.

DXY technical analysis
The DXY saw modest losses on Tuesday, failing to break above 90.70 suggesting weakness in the price at this level. 

DXY dropped through 90.20 taking out the weekly low and bringing a test of 90.00 the key psychological level and 100 sma into the picture. DXY currently trades –0.1% at 89.97, finding support from 50 sma at 89.89. 

A break through this level could see horizontal support at 89.50 tested prior to 89.2 the multi-year low hit last week.
On the upside look for a break over 90.00 to open the door back to 90.20 before a retest of 90.70.

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