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- Higher rates impact on the sentiment in markets.
- Tech companies are the primary loser, with Europe’s tech index leading down as it is down by more than 1% This reflects the attitude in US futures, which are down 0.9 percent on the Nasdaq. In the meanwhile, S&P 500 futures are down 0.5 percent, and Dow futures are down 0.2 percent.
- Just be cautious if losses increase, since this might cause further risk aversion in the market. In turn, this might assist to dampen the possible breakthrough in oil prices today.
- Rising yields are the key theme to watch on the day, and for the time being, that is leading to more defensive equities sentiment as tech stocks are dragged down heading into European trading.
- This might lead to broader risk aversion tones later in the day, so keep an eye on it. The EUR/USD is trading slightly below 1.1400, while the GBP/USD is challenging its 200-hour moving average at 1.3627 as it retreats from its 200-day moving average of 1.3732.
- Elsewhere, as previously stated, it is essentially make or break time for oil. Scale down on oil longs at current levels, since there is a chance of a retreat due to technical fatigue. However, if we witness a breach of the critical resistance zone, anticipate the following leg upward to be rather powerful.
- Nasdaq futures are down 1.6 percent on the day, putting more pressure on shares across the board, with European indexes already approaching 1% falls. In the meanwhile, S& P 500 futures are down 0.9 percent, and Dow futures are down 0.6 percent. I had previously warned you about it several times earlier in the session, the most recent being:
- Just be mindful if losses increase, since this might cause the market to become even more risk averse. As a result, the potential breakthrough in oil prices today may be dampened. On the oil front, we’re also witnessing a little drop in pricing, with WTI crude sliding from $85.70 to $85.03 at the moment.
- The dollar is holding stable in the day despite increased rates.
- The greenback remains in a good position to begin the European morning.
- Higher rates are the major topic to watch for today, with 2-year and 10-year Treasury yields returning to pre-pandemic levels. The former is back over 1%, while the latter, which was as high as 1.84 percent earlier in the day, is now hovering at 1.82 percent.
- This has weighed on the sentiment in the stock market and maintained the dollar in a bit better position to get things underway. The EUR/USD is in a bit of a tizzy, hovering around 1.1400. However, GBP/USD is under pressure after being rejected by its 200-day moving average last week, and it is now facing a critical near-term test.
- Price is approaching its 200-hour moving average, and a break below it will shift the near-term bias to negative. That will be the crucial level to keep an eye on in the coming sessions.
- In the meanwhile, the USD/JPY is trading up to 114.80 levels after a recent recovery, although upside is limited to its own 200-hour moving average at 115.00.
- The 50.0 retracement level of the recent downswing at 114.92 will also contribute to daily resistance.
- Commodity currencies are under pressure today as risk sentiment weakens, with equities sliding in the aftermath of increased interest rates.
- The Australian and New Zealand dollars are somewhat weaker, but the Canadian dollar is holding up owing to increased oil prices. Notably, USD/CAD is currently testing its 200-day moving average around 1.2498, which will be important to monitor as the pair nears its close.