US OPENING BELL 12-10-2022

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US OPENING BELL 12-10-2022

EUROPEAN EQUITIES REMAIN MIXED AHEAD OF THE US OPENING BELL; THE USDJPY POSTED A NEW YTD HIGH AS DOLLAR STRENGTH CONTINUED; US PPI COULD DETERMINE TODAY’S MARKET MAIN MOVEMENT.

European stocks look somewhat mixed in mid-session as they await the opening of U.S. cash. Currently, the Dax gains 0.21%, the Cac40 0.17%and the Eurostoxx 0.23%, while the Milan, London and Madrid stock exchanges remain negative. Unfortunately, market sentiment remains fragile for the time being, mainly because the news that keeps coming in on all major fronts is far from reassuring. In the morning, another denial came after the Financial Times report that the BoE would still be ready to support the bond market beyond Friday’s deadline. In the total confusion then, especially on the communication side, to suffer are mainly the pound and all those markets more linked to BoE decisions that, as we know, like all other markets, do not like uncertainty. In addition to this, also from a few hours ago is the news that damage has been reported to the Druzhba pipeline that transports gas from  to Europe via Poland. Despite this, accredited sources confirmed that the gas flow has not been blocked or decreased for the time being.

As for the FX market, of particular note is the continued weakening of the JPY against the major currencies, especially the U.S. dollar, against which it has made a new low since August 1998. The causes are relatively simple and are to be found in the continued deep divergence in monetary policy between the FED and the BoJ, with the latter having already reiterated several times how forward guidance will probably not change for the next 2 or 3 years.

Finally, this afternoon investors will focus on the U.S. PPI data, which is likely to be the only real market mover today, along with ECB President Lagarde’s speech and the FOMC Minutes that will be released this evening.

EURUSD, M15

As expected, the EURUSD remained below the main intraday resistance area and dropped toward the primary support. At the moment, the pair is fighting to hold the 0.9699 mark. From a technical point of view, the sideways trend will likely continue, at least until the US PPI data will be released later this afternoon. After that, if the PPI result is better than expected, new bearish pressures could come into the market, and the pair could break the support downward toward the W-2 POC. On the other hand, if the PPI result is worse than expected, buyers could force prices up to the resistance again 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: 0.9699, 0.9633.

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: 0.9730-0.9743, 0.9800.

S&P500, M30

The S&P index failed to overcome the primary intraday resistance yesterday, and it is now trying to do the same but remained below it for the time being. On the support side, there are no notable supports apart from the October 3rd low around the 3558 mark. From a technical point of view, as long as the index remains below the most significant intraday resistance area between the W-2 POC and the W-2 VAL, the most likely scenario is a continuation of the trend toward the support and beyond it. On the flip side, if prices can consolidate above the resistance, a stretch to the W-1 VAL is expected. Even in this case, however, the index’s movement will be highly dependent on the PPI data outcome.

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: 3558.

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: 3619-3641, 3679.

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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