foreign exchange

Following the trajectory of rising US treasury bond bond yields, the US dollar regained its footing in early trading on Thursday. Neil Kashkari, a senior Fed official, also provided support for the US dollar by suggesting a 50 basis point rate hike in March. Later today, we will release eurozone inflation data, which is now the main focus of currency traders. Recent data released by France and Spain shows an unexpected acceleration in consumer price increases, which some believe is a harbinger of broader data released later Thursday. Higher than expected inflation data may strengthen the euro and support the belief that the European Central Bank (ECB) may need to raise interest rates more than initially expected.

Ricardo Evangelista - Senior Analyst, ActivTrades

European Equities

Due to the prevalence of risk aversion, global stock markets showed a bearish trend, and the European Union stock market fell on Thursday. Due to the uncertain medium to short term economic outlook and the prospect of global money supply tightening, investors are becoming increasingly risk averse and withdrawing cash from riskier assets.

Although the hawkish stance of the central bank is now well reflected in the market, investors who initially expected a rapid shift in interest rates are now working hard to assess the impact of long-term high interest rates on corporate profits and the overall economy Nevertheless, the macro level may still dominate, and many are waiting for the CPI released by the eurozone today and the minutes of the last policy meeting of the European Central Bank, which may bring greater volatility to the stock and foreign exchange markets.

STOXX-50 is currently testing its main support area near 4200.0, and breaking through this area could pose a great risk to prices as it would invalidate the mid-term bullish market that began in October last year.

However, as long traders are still defending the region, the RSI indicator did not show the expected breakthrough, and the trading volume of the breakthrough is still exceptionally low. From a technical perspective, we believe this is not the most likely scenario to occur.

Pierre Veyret - ActivTrades Technical Analyst

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