Levels to watch: FTSE, DAX and S&P 500

Bulls have staged a strong holding action this week but the rising pound and euro could spell tough times ahead for the FTSE and DAX. 

Source: Bloomberg

FTSE 100 eyes 7200

The index has spent the week within touching distance of 7200, but has been unable to hold on above this level. The first task for bears is to push below 7160, which would open the way to 7100 and then 7070.

Momentum seems to have drained away this week, with the possibility of a modest correction now in the offing.

DAX could find support at 11,165

A strengthening euro appears to be the major risk to the eurozone indices at present. After peaking on Tuesday, the index has slipped lower, but only a drop through 11,430 would really suggest that a downward move is now in play.

Further support below this lies at 11,310 and then 11,165.

S&P 500 could head towards 2289

A bounce over the course of this week has restored the bullish outlook, but so far the zone from 2270 to 2280 has acted as resistance, just as it did throughout December.

A turn lower from here would target 2248 and then 2222. A break above 2280 would head towards 2289 and then 2304 for the index.

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