FOREX
The euro rose against the dollar during early Tuesday trading, but has since given up those gains, as investors, albeit with some hesitancy, continue to price-in the rising probability of the Federal Reserve pausing after hiking rates one last time in May. The current scenario is bearish for the greenback because, unlike the Fed, the ECB is expected to continue to tighten monetary policy beyond May. Inflation remains sticky in Europe, with the central bank staying committed to taming escalating consumer prices. With a 50 basis points rate hike expected next month, the ECB could add two more 25 basis points increases in June and July, if inflation remains elevated. With the monetary policies of the two central banks likely to diverge after May, we may see further euro gains in relation to the dollar, although a degree of uncertainty must be considered as the entire situation hinges on economic data still to be published.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Equities opened lower on Tuesday in Europe following a patchy trading session in Asia, as uncertainty rises ahead of key macro data and an intense week on the corporate reports front.
Market sentiment remained under pressure in early trading as investors kept limiting their exposure to risk, seeking for safety at least temporarily while waiting for key macro data from the US, that is expected to shape the future monetary path the Federal Reserve will take at its next meeting. In addition, investors are also keeping an eye on the corporate front and many are already pricing a negative impact from the current economic and monetary context on company earnings.
The STOXX-50 is trading below the 4,400.0pts mark, mostly weighed down by financials and basic materials, in a bearish break-out attempt of its short-term bullish trendline and following a bearish divergence registered by the RSI indicator. However, the mid-term bullish trend should remain alive as long as no new market bottom below 4,365.0pts is registered.
Pierre Veyret– Technical analyst, ActivTrades
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