Daily market commentary: The optimistic bullish trading stance has taken a break this week in Europe


The US dollar climbed back from the multi-month minimums touched on Wednesday. The greenback has now given up most of the gains accrued in the second half of 2022, mainly due to expectations that the Fed will adopt a less aggressive stance towards controlling inflation in order to minimize the impact of the incoming contraction. However, after yesterday’s release of a batch of disappointing economic data, in an apparent paradox, the US currency found support as investors looked for the reassurance provided by the safe-haven dollar. A larger than expected slowdown in economic activity in the US triggered a deterioration in risk appetite in the global financial markets, leaving the dollar trapped between two opposing forces, as the scales balance between the downside created by expectations of a more benign Fed, and the upside offered by the haven trade.

Ricardo Evangelista – Senior Analyst, ActivTrades

Market Analysis

European Shares

Stocks drifted lower in Europe, following the mixed sentiment registered across Asian benchmarks, as traders brace for significant macro developments.

The optimistic bullish trading stance has taken a break this week in Europe as the STOXX-50 index, registering negative performances across all sectors, failed to clear the 4,200.0pts resistance.

In addition to the recent profit-taking moves we have noticed on most markets, investors are being cautious ahead of key macro releases with today’s speech of central banker Christine Lagarde as well as the minutes of the last ECB meeting. Furthermore, investors are also waiting for the US initial jobless claims, the Philadelphia Fed manufacturing index and, more importantly, US crude oil inventories – this has already brought volatility back towards energy shares and has seen the energy sector register the worst performance of the STOXX-600 index so far. Technically speaking, the situation isn’t encouraging for the STOXX-50 index, as prices registered a bearish divergence with the RSI indicator, shortly after its failure to clear the 4,200.0pts mark. This tends to indicate the current correction could go further down towards 4,085.0pts on the short-term basis if bear traders manage to break the current 4,140.0pts support zone.

Pierre Veyret– Technical analyst, ActivTrades 

Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.


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