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EUROPEAN EQUITIES HIT SIX-MONTH HIGHS AFTER POWELL’S SPEECH; THE USD CONTINUES TO UPDATE LOWS AS CHINESE AUTHORITIES APPEAR READY TO RELAX THEIR STRICT ANTI-COVID POLICY.

The main European equities reached a six-month high after Powell’s words in last night’s speech. Currently, the Dax gains 0.75%, the Cac40 0.21% and the Eurostoxx 0.60%.

Sentiment improved this Thursday thanks to two main pieces of news. The first came from Powell’s words last night, and the second came from China. In fact, the FED president made it clear to the market that although the FED is not yet convinced that the fight against inflation is over, the central bank still considers it appropriate to start considering a reduction in rate increases as early as the next meeting in December. Therefore, the market is currently pricing a 50 bp increase at 77%. On the other hand, there has been some confirmation from China that the authorities are ready to loosen the stringent anti-covid measures that have sunk the Chinese economy so far.

Elsewhere, the US dollar lost ground against its major counterparts, continuing to update period lows and trading just above the 105 (dollar index) mark. The JPY also continued to appreciate after the BOJ’s interventions to curb the national currency’s fall. At least against the US dollar, it is now at its highest level since August.

As far as the macroeconomic calendar is concerned, today, investors will mainly focus on the Core PCE Price Index, initial jobless claims, the ISM US manufacturing PMI and some scheduled speeches by ECB members.

EURUSD, M15

The EURUSD broke all resistances and trades above the most significant intraday support, the W-1 VAH. On the other hand, the most interesting resistance area is the one highlighted in the chart, between the values of 1.0525 and 1.0587. From a technical point of view, as long as prices remain above support, the most likely scenario is a continuation of the trend towards the resistance area. Conversely, if prices break the support to the downside, a decline towards the 1.0440 level and the LVN in extension is expected.

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: 1.0429, 1.0404, 1.0387.

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: 1.0525-1.0587.

S&P500, M30

The S&P500 broke all the resistance upward and is now trading above the most significant intraday support, the LVN, around the 4065 mark. On the opposite side, prices could find sellers around the 4130 mark, a yearly HVN. From a technical point of view, as long as prices remain above the support, the most likely scenario is a continuation of the rise toward the resistance around the 4130 level. On the other hand, a breakout of the support could lead prices to the W-1 VAH and to the W-1 POC in extension.

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: 4065, 4043, 4027.

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: 4130.

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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