Post by: PocketOption on Feb 04, 2023, 11:23 am
EUROPEAN EQUITIES RALLIED AFTER POWELL’S SPEECH ON THE DAY OF THE ECB AND BOE MEETINGS. THE USD FELL AND IS TRADING AT APRIL 2022 LOWS, WHILE NASDAQ BIG TECHS REPORT EARNINGS AFTER THE CLOSE.
Most European equities celebrated Powell’s speech last night and rose sharply this Thursday. Currently, the Dax gains 0.62%, the Cac40 0.52% and the Eurostoxx 0.63%.
The chairman of the FED announced at last night’s meeting the (expected) interest rate hike of 25 bp, bringing rates to the 4.50%-4.75% level. However, he did not use the same hawkish tone as in the last meetings. On the contrary, he only referred to a ‘couple more hikes’ and started talking about the fact that, for the first time, it can be said that the “disinflationary” path has begun. He also said he was not too worried about current market prices. One thing to note is that the words ‘disinflation’ and ‘disinflationary’ were used much more frequently than at the December meeting. It, therefore, seems that the Fed is now more confident that two more 25 bp rate hikes can bring inflation back to the 2% target. The market had come to the press conference betting on a dovish tone and was partially satisfied. The risk-on therefore continues.
The most obvious impacts on the markets were on Treasuries, the USD and all instruments that gravitate around the USD. The former fell, as did the latter, which is currently trading at its lowest since April last year.
Today, on the other hand, will be the critical day to see what the intentions of the other two central banks, the ECB and the BOE, will be, as they have different situations to deal with and, above all, seem to be much less close to the pivot than their American counterparts.
Regarding the macroeconomic calendar, the other news to watch today will be the press conferences of Lagarde and Bailey. Another piece of data not to be underestimated is the US initial claims for unemployment benefits.
EURUSD, M15
The EURUSD surged yesterday following Powell’s words and is now facing the most significant intraday and multiday resistance between the 1.1039 and 1.1054 marks. This resistance will probably be the last one before the 1.1150 area. In contrast, the most critical intraday support is the D-1 VAH. From a technical point of view, as long as prices remain below the resistance, the most likely scenario is a drop to retest the support. On the flip side, if prices rally over the resistance, they could start the attempt to stretch toward the 1.1150 area.
Main intraday support areas where to look for long trades in case of a bullish candlestick pattern or short trades in case of a bearish candlestick pattern: 1.0931, 1.0902, 1.0872-1.0860.
Main intraday resistances areas where to look for short trades in case of a bearish candlestick pattern or long trades in case of a bullish candlestick pattern: 1.1039-1.1050, 1.1150.
S&P500, M30
The S&P500 had a similar move compared to EURUSD. It is important to note that the index gave another great buy opportunity in our support area between the 4039 and 4050 marks before Powell’s speech. As for today, the index is trading above the most crucial intraday support, the yearly HVN. In contrast, the most significant resistance is the 4166 mark (which is the 13-12-2022 high). From a technical standpoint, as long as prices can hold the support, the most likely scenario is a continuation of the rise to target the resistance. If the index can also break the resistance, it could start a climb toward the Y-1 VAH. On the other hand, if prices drop below the resistance, they could drop to the W-1 VAH.
Main intraday support areas where to look for long trades in case of a bullish candlestick pattern or short trades in case of a bearish candlestick pattern: 4120, 4061, 4050-4039.
Main intraday resistances areas where to look for short trades in case of a bearish candlestick pattern or long trades in case of a bullish candlestick pattern: 4166, 4252.
Key:
POC= Point of Control
VAH= Value Area High
VAL= Value Area Low
LVN= Low Volume Node
HVN= High Volume Node
W-1= last week
W-2= two weeks ago
W-3= three weeks ago
D-1= yesterday
D-2= two days ago
D-3= three days ago
The post US OPENING BELL 02-02-2023 appeared first on Key To Markets Blog.
Source: US OPENING BELL 02-02-2023 (https://www.keytomarkets.com/blog/analysis/us-opening-bell-02-02-2023-19580/)