Market Analysis

Euro is at its lowest to the US dollar in almost 20 years

FOREX

The euro’s bearish trend is continuing during early Tuesday trading, with the single currency at the lowest it has been in relation to the US dollar in almost 20 years. The expectations amongst analysts are that the US dollar will soon become more valuable than the euro, as the economic outlook in Europe deteriorates, while on the other side of the Atlantic the Federal Reserve remains fully committed to controlling inflation through relentless tightening of monetary policies. The complete cut-off of Russian gas to Europe is now a realistic prospect; a scenario that would exacerbate the ongoing energy crisis in the continent and increase the already high probability of a recession in the eurozone. Against such strong headwinds, the single currency remains under pressure and exposed to further losses, especially versus the US dollar.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

OIL

Oil prices dropped during early Tuesday trading, as the markets appear increasingly convinced that a global economic slowdown is coming. With inflation remaining high and forcing central banks and fiscal authorities to withdraw stimulus, an energy crisis in Europe that appears to be about to get worse and trigger a recession, and disappointing demand in China due to continuing Covid concerns, the prospects for future oil demand are being revised to the downside. Such expectations, that a decline in demand in the months ahead will become the dominant market driver, are keeping pressure on the price of the barrel and could lead to further drops.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

EUROPEAN SHARES 
European shares continue to slide lower on Tuesday, alongside Asian benchmarks and US futures, as caution prevails in the markets. Cash is finding its way to safer havens today, as both the USD and JPY currencies trade higher while treasuries also posted gains. The ECB’s inaction regarding monetary policy is keeping a certain pressure over the Euro, while stock investors remain discouraged by mounting price pressures as well as the lingering energy crisis. Elsewhere, investors’ appetite for riskier assets is also being undermined by the prospect of renewed lockdowns in China, while some traders are braced for patchy US corporate results due to possible negative impacts brought by a stronger dollar over company’s earnings. There is a high chance the trading stance won’t significantly move ahead of tomorrow’s US CPI and FED Beige Book release, even if investors may pay attention to this morning’s German ZEW Economic Sentiment as well as the EIA Short-term Energy Outlook due later in the afternoon.

The Stoxx-50 index continues to trade inside its 200-points wide range, currently close to a major support area.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

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