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EUROPEAN EQUITIES REMAIN IN THE RED AHEAD OF THE US OPENING BELL; THE BOE HIKED INTEREST RATE BY 75 BP AS EXPECTED, WHILE THE USD EDGED HIGHER.

Major European stocks remain in the red mid-session and awaiting the opening of Wall Street. Currently, the Dax gives up 1.09 %, the Cac40 0.72% and the Eurostoxx 1%. Sentiment remains negative, and the sell-off that began last night continues. This is all because of Powell’s words, who, despite the rate hike widely discounted by the market, reiterated his hawkish attitude by foreshadowing a rate hike peak that will be reached at a higher level and with more lag than budgeted.

Meanwhile, the BOE also raised interest rates by 75 bp, the highest increase in 33 years. Again, the market’s reaction will have to be confirmed after Bailey’s words, who will speak at a press conference this afternoon. Should the tones remain hawkish here as well, the market could head for new lows, as could the pound. For the time being, reactions have not been noteworthy.

Elsewhere, the US 10-year continues to rise with the yield again exceeding 4%, while the curve remains inverted (the two-year yield is 4.71% versus 4.18 for the 10-year). On the commodities front, oil is down slightly despite lower-than-expected inventories, likely in the wake of news from China, reiterating through government sources that no imminent relaxation of covid measures is expected.

Regarding the macroeconomic calendar, it will be necessary to closely follow Bailey’s press conference and initial jobless claims in the US in the afternoon.

EURUSD, M15

The EURUSD broke the most significant intraday support area around the 0.9763 mark this morning and posted a pullback with a pin bar around that area. From a technical point of view, the 0.9763 mark has become the most significant resistance area for the rest of the day. As long as prices remain below it, the most likely scenario is a continuation of the drop to target the W-3 POC. On the other hand, a bullish breakout of the resistance could lead prices to the LVN around the 0.9809 mark (with an intermediate resistance around the 0.9780 mark).

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: 0.9702.

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: 0.9763, 0.9780, 0.9809.

S&P500, M30

The S&P500 continues its drop after yesterday’s sell-off. It is now trading below the most significant intraday resistance area, between the W-2 VAH and the daily LVN around the 3745 mark. From a technical point of view, as long as prices remain below the support, the most likely scenario is a continuation of the drop to target the most significant intraday support, the W-2 POC (uncovered). On the flip side, a breakout of the resistance could lead prices to the W-1 VAL (with an intermediate resistance around the 3769 mark).

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: 3685.

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: 3738-3745, 3769, 3791.

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

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