Market Analysis

The US dollar regained some momentum


As Tuesday’s trading session gets underway, the US dollar regained some momentum in relation to other major currencies, recovering a small part of the 2.5% lost to its peers during Friday and Monday. The dollar’s performance over the last few sessions has been determined by expectations over the outcome of today’s mid-term elections, with other factors, such as the release of employment data, shrugged aside by traders. Against this background, the dollar losses of the last few sessions reflect investor expectations of Republican party success in today’s elections. Should these predictions materialize, there will be less scope for further fiscal stimulus in the US, as President Biden will be unable to obtain approval for such measures; such a scenario is dollar-negative and may create scope for further losses.

Ricardo Evangelista – Senior Analyst, ActivTrades


Source: ActivTrader

Shares drifted moderately lower in Europe on Tuesday, alongside US Futures and following a mixed Asian trading session.

Market sentiment remains uncertain this week as traders brace for another batch of macro developments such as today’s US mid-term elections and EIA Short-term Energy Outlook, while the crucial CPI report looms on Thursday. In addition, investors are also starting to digest the potential threat of a shutdown in the US, brought about by the US debt ceiling situation.

Even though these market drivers take place on the other side of the Atlantic, they still have a significant impact on market sentiment towards EU stocks and we expect these markets to remain volatile this week despite the lack of major EU macro data release, apart from the German CPI on Friday.

The DAX-40 index has registered one of the most resilient price actions so far, as the market keeps trading towards the upper band of its rising wedge, close to a 3-month high. However, the bearish divergence registered by the MACD indicator highlights the current short-term uncertainty as new highs are being registered with less and less strength from a technical point of view.

Pierre Veyret– Technical analyst, ActivTrades         

Source: ActivTrader



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