Market Analysis

The euro is on the back foot

FOREX

The euro is on the back foot against other major currencies during early Tuesday trading in Europe. The single currency failed to join the risk party despite an improvement in market sentiment following appeasing words towards China, from a senior US official, and an increasing number of countries announcing the easing of their lockdowns. The euro could once again be coming under pressure as the German Constitutional Court prepares to issue a rule on the legality of the European Central Bank’s purchase program, potentially limiting the German Bundesbank’s ability to participate in the program and restricting the range of action the ECB can take at a time when it may be needed the most.

Ricardo Evangelista – Senior Analyst, ActivTrades


OIL 

Oil looks to be able to see light at the end of the tunnel with all WTI futures rebounding, including June expiry. Investors’ renewed optimism, which could yet prove premature, is based on expectations that not all US tanks will have “No Vacancies”. Traders have readied themselves by increasing storage capacities as well as other specific measures to allow them to receive crude oil and avoid what happened on the 20th of April, when the WTI expiry of May finished its life in negative. Furthermore, investors are expecting the global economy to bounce back relatively quickly and increase oil demand. These changes are unlikely to see the oil price easily rush back to $50, but should at least keep the prices $20-$30. Of course, a strong second wave of the virus could change the scenario once again, but at this stage investors are not betting on further lockdowns of economies.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
Stocks opened higher everywhere in Europe on Tuesday, extending the gains at the end of yesterday’s trading session by US equities. This change in sentiment was triggered by investors noticing good signs on the virus front from California, ahead of the reopening of the state next Friday. Spain, France and Hong Kong are among the latest areas to be easing lockdown measures soon, with investors eagerly awaiting the impact these changes have in turning around the existing economic data that is already outdated. Traders are likely to retain a defensive trading stance on riskier assets before more clues emerge on how economies are coping with opening back up again. In the meantime, the earning season continues today with Q1 results expected from large caps like BNP Paribas and BMW. In addition, investors will also be interested to see how the travel and leisure sector has been impacted with results from Walt Disney and Air-France KLM due later today.

The DAX-30 is one of the top movers in Europe today, trading just below 10,700pts. The market is challenging the upper band of its bullish channel in an attempt to fill the bearish gap left open at the beginning of the week. Upcoming targets are at 10,740pts (38.2% Fibonacci) and 10,855pts (50% Fibonacci).

Pierre Veyret– Technical analyst, ActivTrades

source: ActivTrader

 

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