After several consecutive sessions in the red, the euro was up by more than 0.4% versus the dollar during early Tuesday trading. While there is an absence of significant developments to explain this change in dynamic, one suspects that the recent dollar gains, sustained to a large extent by fears of inflation and rising bond yields, may have started to run out of steam. The strength demonstrated by the American currency over the last few weeks could be just a temporary rebound against a bearish context overall for the greenback.
Oil prices are reacting to yesterday’s cold shower. Monday’s decline could yet prove supportive, as it was mostly linked to some profit-taking after a long and probably too quick rally. It is therefore crucial for the price to hold above the low reached earlier this morning, which is now representing a valid support zone. Moreover, there could be some concern about the strength of demand if the price continues to rise so fast. In this scenario, a consolidation pause could be healthy for oil, which so far – despite yesterday’s decline – is keeping the bullish trend of the last few months intact.
European shares opened mixed on Tuesday with a positive start in Italy offset by small losses in Frankfurt and Paris. Volatility remains high around the globe this week as investors keep on betting on more and more dovish policies from central bankers, although the sharpest movements are on overbought sectors with stretched valuations like tech rather than the stock market as a whole. While investors continue to reduce their exposure to these overvalued stocks, the strong performances on cyclical values and other energy shares suggest traders are just reorienting their portfolio towards stocks with the most upward potential, meaning the risk appetite remains.
Meanwhile, the Stoxx-50 Index registered a strong bullish break-out of its short-term consolidation zone yesterday, which now opens the way to more gains towards 3,795pts and 3,835pts by extension while 3,760pts and the 3,730-3,743pts zone are the main support levels.
Pierre Veyret– Technical analyst, ActivTrades
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Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.