THE LONDON OPEN 03-11-2022

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THE LONDON OPEN 03-11-2022

EUROPEAN EQUITIES OPENED LOWER AFTER A NEGATIVE ASIAN SESSION; THE FED REPEATED ONCE AGAIN ITS HAWKISH STANCE AFTER ANOTHER 75 PB RATES HIKE.

European stocks opened lower this Thursday after a negative Asian session, with all major regional indexes below parity. In particular, the ChinaA50 index lost 1.35%, and the ASX200 lost 1.84%. The Japanese stock exchange, however, remained closed for holidays. Market sentiment thus turned negative again after last night’s FOMC decision. Although it raised interest rates by 75 bp as widely expected, the Fed’s executive arm led to an interesting market reaction, mainly due to Powell’s words in the subsequent press conference.

The major U.S. indices rose immediately after the announcement bearing in mind that a section was added in the monetary policy statement referring to “determining the pace of future increases…taking into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity…” Subsequently, however, the President spoke of the fact that rates are likely to remain high for longer than expected and that the peak will be reached at a higher level than initially thought. This was enough to turn the market around, which put it down more than 3% from the day’s highs.

Elsewhere, the dollar recovered earlier losses by closing at highs since Oct. 21 above 112 (dollar index). Also of note was the holding of the 146 mark on the USDJPY, which appears to have become a critical support level in the medium term. Should the monetary policy of the FED and the BoJ not change quickly, the latter will likely be forced once again to intervene in the exchange rate.

As for the macroeconomic calendar, today, investors will focus on the UK services and composite PMI as well as the BOE decision. Other essential data will be European unemployment, followed in the afternoon by Initial Jobless Claims in the US.

EURUSD, M15

The EURUSD dropped heavily after the FOMC decision and is now close to the most significant intraday support area, the W-3 VAH & W-2 VAL. From a technical point of view, the most likely scenario is a continuation of the drop to the support and a subsequent pullback attempt to retest the most critical intraday resistance, the LVN, around the 0.9809 mark. On the opposite side, a breakout of the support area could lead prices to drop further towards the 0.9730 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: 0.9763.

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: 0.9809, 0.9848.

WTI, M15

The WTI found sellers around the most significant intraday resistance between the W-3 VAH and the W-1 VAH. From a technical point of view, as long as prices remain below this area, the most likely scenario is a continuation of the drop to the W-1 POC, which is also the most important intraday support. On the opposite side, a notable stretch to the upside could happen if prices break the resistance upward.

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: 87.35, 85.87.

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: 89.00, 89.30.

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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