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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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European Open: EUR/USD and parity in focus for today’s German ZEW report

Article By: ,  Market Analyst
July 12, 2022 6:56 AM

Asian Indices:

  • Australia's ASX 200 index rose by 13.8 points (0.21%) and currently trades at 6,616.00
  • Japan's Nikkei 225 index has risen by -502.75 points (1.28%) and currently trades at -188.00
  • Hong Kong's Hang Seng index has fallen by -255.11 points (-1.21%) and currently trades at 20,869.09
  • China's A50 Index has fallen by -209.61 points (-1.45%) and currently trades at 14,260.76

UK and Europe:

  • UK's FTSE 100 futures are currently down -27 points (-0.38%), the cash market is currently estimated to open at 7,169.59
  • Euro STOXX 50 futures are currently down -25 points (-0.72%), the cash market is currently estimated to open at 3,446.69
  • Germany's DAX futures are currently down -91 points (-0.71%), the cash market is currently estimated to open at 12,741.44

US Futures:

  • DJI futures are currently down -156 points (-0.5%)
  • S&P 500 futures are currently down -77.75 points (-0.65%)
  • Nasdaq 100 futures are currently down -21.5 points (-0.56%)

 

US Treasury Secretary Janet Yellen is set to discuss further sanctions against Russia with Japan’s Finance Minster later today. They’re also set to discuss “currencies” and a price cap for Russian oil. The US dollar index continued its ascent overnight and reached its highest level since September 2002. And that has forced EUR/USD down to just +5 pips above parity – a key level for today’s session, highlighted by rising implied volatility and demand for put options (downside protection).

 

EUR/USD 15-minute chart

Perhaps today’s ZEW report could be the straw which breaks parity’s back. The sentiment report for Germany is scheduled for 10:00 BST and is unlikely to show a material lift in sentiment. It reached a post-pandemic low of -41 in April, has since risen to -28 since but there’s no pressing reason to suggest it cannot move lower again given the wave of recession headlines of late.

EUR/USD fell to 1.0004 early in the session and now trades around 1.0012. If it can hold above parity then a break above 1.0032 assumes a countertrend move is underway. Whilst a clear break below 1.000 runs the risk of triggering stops and fresh sell orders (and potentially moving the market lower).

 

USD/JPY 1-hour chart:

USD/JPY remains in a strong uptrend on the 1-hour chart, although currently trading within a potential bull flag or 3-wave retracement. The daily low respected the 137 handle as support and momentum is now turning higher, so we’re on guard for a potential breakout, which would then bring 138 into focus. However, should we see a break of today’s low it would also be below the daily pivot point, and could switch the bias to bearish over the near-term.

 

FTSE 350 – Market Internals:

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