FOREX
It’s Fed decision day, and the US dollar is hedging higher as investors anticipate the conclusion of the American central bank’s policy meeting later today. Few expect another rate hike, but the event has the potential to be dollar-positive, nevertheless. It all hinges on the message delivered by Jerome Powell; if, as some expect, the Chairman of the Fed puts his emphasis on a higher-for-longer scenario, the dollar is likely to remain supported, especially if Powell also hints at the possibility of one last hike before the end of the current cycle. Against this background, and with geopolitical uncertainty also supporting the greenback, the currency could once again test the yearly maximums touched in early October.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares fluctuated on Wednesday, with prices pulling back shortly after a rise following the opening bell as the markets hit major resistance following yesterday’s positive developments.
A fresh wind of relief reassured investors yesterday after the EU inflation report came out significantly better than expected (2.9% vs 3.3% expected), fueling hopes of a less dovish monetary policy from the ECB for the end of the year. These eased concerns regarding monetary tightening in the eurozone are considered one of the most important market drivers, even offsetting lingering geopolitical worries from the Middle East.
However, this bullish sentiment hasn’t been extended further since the start of today’s trading session, and two major factors can mainly explain this.
One comes from the macro front as traders face another hectic day with a batch of key US data releases, such as the PMI, JOLTs, and crude oil inventories, alongside the highly awaited FOMC meeting and the Fed’s decision on interest rates.
The second reason is technical: the market pulled back after hitting a key resistance following its very short-term rally that started last Friday, which drove the STOXX-50 up to 4,080.0pts following its rebound below the 4,000.0pts zone.
The 4,074.0pts/4,094.0pts is seen as a major resistance level, and investors will need further positive developments to drive prices higher, especially after the recent mixed earning season in Europe. These developments may come from this afternoon’s slew of US data, a geopolitical turning point in the Middle East or even solid dovish hints from ECB’s officials.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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