Fed hikes BoE up next

EUR/GBP => The pair rises towards 0.86
Adobe => The stock hovers around a 2-year low
S&P500 => The index rises above 3800

EUR/GBP rises ahead of BoE rate decision

EUR/GBP lost 1.2% in the previous session.

The euro fell following the ECB’s unscheduled meeting, in which the central bank sought to address concerns that the region is on the brink of another debt crisis. The ECB has pledged to speed up work on a new “anti-fragmentation” tool that could be used to counter soaring borrowing costs in the weaker, peripheral economies such as Greece, Portugal, and Italy.

Attention now turns to the BoE, which is widely expected to hike interest rates by another 25 basis points, marking the fifth straight meeting of hikes. This would raise the benchmark lending rate to 1.25%. However, concerns over the UK being tipped into recession are growing.

Where next for EURGBP?

The EURGBP trades above the multi-week rising trendline, above its 20 & 50 sma and ran into resistance at 0.8720 and rebounded lower.

The RSI remains in bullish territory, suggesting that there is more upside to come. Resistance can be seen at 0.8490, the May 12 high, ahead of 0.8658, the September 29 high. A break above here opens the door to 0.8720, the 20022 high. On the downside, support can be seen at 0.8537 the 20 sma, with a break below here could 0.8487, the June 9 low. A break below here would create a lower low.

Adobe Q2 earnings preview.

Adobe is due to report Q2 earnings as the share price tumbles to a two-year low last month of $371, down from $700 in November.

Adobe is expected to report another quarter of solid revenue growth this week, boosted by demand for the company’s products and services. Wall Street is expecting Adobe to report a 13% increase in revenue year on year to $4.35 billion, just above the $4.34 billion targeted by Adobe. Adjusted EPS is expected to rise 9% annually to $3.30, in line with the company’s forecasts. The numbers come after DocuSign spooked the market last week, missing expectations.

S&P500 rises post-Fed

S&P500 rallied 1.4% in the previous session after the Federal Reserve raised interest rates by 75 basis points, as expected; the largest rate hike in almost 30 years as it ramps up the fight against four decade-high inflation.

This is the third hike since March, and the Fed also indicated that there could be another 75-basis point hike in July. By the end of the year, the US central bank now sees interest rates at 3.4%, making borrowing more expensive. Stocks are rising following the announcement after falling steeply at the start of the week when a 75 basis point hike was priced in. The market appears to be upbeat that the Fed is addressing inflation head-on.

Today US initial jobless claims data is in focus. Jobless claims rose to a 3-month high last week and are expected to ease slightly this week. Any signs of weakness in the labour market could hurt sentiment. 

Support can be found at 3700 (2022 low) and 3650 (50 round number).

Resistance for the pair can be seen at 3860 (May 12 low) and 4007 (20 sma)