ECB doves rattle markets

The Euro/Dollar swung erratically during trading on Thursday following Mario’s Draghi’s dovish remarks on Eurozone growth that left investors pondering the likelihood of further central bank interventions in the future. Although the European economy is engrossed in a losing battle against falling inflation and economic growth displaying tepid signs of recovery, it was widely expected that the ECB would keep rates unchanged amid talks of diminishing returns of monetary policy.

While talks of helicopter money was an ongoing theme that seized the limelight, Draghi wasted no time in quelling the mounting expectations over the central bank indulging in such monetary measures any time soon. With ongoing global woes persistently exposing the European economy to downside risks and negative rates expected to stay for an extended period, sentiment towards the Eurozone remains firmly bearish. Bulls may be able to exploit the heavily warped financial markets that have been skewed by ongoing unorthodox central bank interventions and the elevated fears that central banks may be running out of ammunition could offer a foundation for bullish investors to strike.

From a technical standpoint, the EURUSD has been left trapped under some pressure with support at 1.1250 and resistance at 1.1430. Prices are trading marginally below the daily 20 SMA while the MACD has also crossed to the upside. A breakout above 1.1350 could offer bulls the platform needed for a sharper incline towards 1.1430.

Stock markets pressured

Stock markets staged a decline during trading on Monday following the slight depreciation in oil prices and diminishing expectations of further stimulus measures by the People’s Bank of China that renewed a wave of risk aversion. Asian markets were vulnerable and open to losses with previous gains surrendered after the harsh combination of fading expectations over central bank intervention and an appreciating Yen encouraged investors to scatter from riskier assets. In Europe, dovish comments from Draghi left traders unconvinced over the ECB’s stimulus measure and this triggered a selloff that saw European stocks decline from three month highs. This bearish domino affected American markets and may likely rollover into the new trading day as concerns over the health of the global economy and potential decline in oil prices erode risk appetite, consequently encouraging investors to offload riskier assets.

Weak retail sales leave Sterling pressured

The Sterling stumbled across the board during trading on Thursday following the tepid UK sales report at rekindled concerns over a potential economic slowdown in the UK economy. This release comes at a time where ongoing Brexit concerns have led to a painfully deterioration in investor attraction to the Sterling, while tepid domestic data provide very little incentive for the Bank of England to raise interest rates. Sentiment remains strikingly bearish towards the pound and with uncertainty mounting as the E.U referendum looms, bears have been offered an opportunity to install another round of heavy selling of the Sterling across the board.

From a technical standpoint, the GBPUSD is bearish and this relief rally could offer an opportunity for a steep decline towards 1.410.

Crude declines on output fears

WTI Crude descended slightly in Thursday’s trading session as concerns towards the excessive oversupply in the markets haunted investor attraction which in turn encouraged bearish investors to attack. With the Kuwait strike at an end and concerns lingering over OPEC’s inability to secure a stable freeze deal, oil prices could be preparing for a slippery slide lower towards $40. This technical bounce seems overextended and when the reality that the fundamentals of an unrelenting oversupply has not changed, the downtrend could resume with force. From a technical standpoint, bears need to break back below $41.40 for a path towards $38.

Commodity spotlight – Gold

Gold staged an incredible appreciation towards $1270 before crashing back and trading lower on Thursday following the European Central Banks decision to keep interest rates unchanged that left most investors on edge. Regardless of the losses that took the metal back below $1250, prices are still fundamentally bullish and ongoing anxieties over the state of the economy may create a foundation for bulls to inject another round of heavy buying. While a weakening Dollar could accelerate any further moves up, a solid daily close above $1250 may open a path back towards $1270. From a technical standpoint, prices are trading above the daily 20 SMA while the MACD has crossed to the upside. Potential resistance at $1250 could transform into a dynamic support for a drive up towards $1270.

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