Equities Reverse Higher Again, ECB In Focus

Yesterday, the Bank of Canada sounded more positive, as it stated that economic growth in Q1 was considerably better than they have initially forecasted in January. After strong declines, seen on Monday and Tuesday, Wednesday was marked by “risk-on” trading. Today, we will get the ECB’s interest rate decision, which is not expected to end up with any fireworks.

MARKETS REVERSE HIGHER AGAIN

DJIA — TECHNICAL OUTLOOK

As mentioned above, if the index continues to trade above the previously discussed lines, this may attract more buyers into the game, possibly helping DJIA to move further north. The price may then test the 34181 obstacle, a break of which could set the stage for a push towards the 34251 zone, marked by the current all-time high. If the buyers are still feeling comfortable, they might overcome the current all-time high level, this way placing the index into the uncharted territory.

Alternatively, if the price breaks back below the aforementioned upside line and then drops through the 33979 hurdle, marked by the low of April 19th, that might once again temporarily spook the bulls from the field. DJIA could fall into the hands of more bears, resulting in a further slide towards the current low of this week, at 33690. If the selling continues, the next possible target may be at 33544, which is the low of April 13th.

BOC SOUNDS POSITIVE

NZD/CAD — TECHNICAL OUTLOOK

A further slide could bring the rate closer to the 0.8953 obstacle, marked by an intraday swing low of April 16th, which may temporarily provide a hold-up. However, if the bears continue to dictate the rules, NZD/CAD could fall to the next possible support area, at 0.8912. That area is marked by the low of April 16th.

On the other hand, if the pair reverses back above the 0.9015 barrier, marked by yesterday’s intraday swing high, that may open the door for a move up again. NZD/CAD might travel to the 0.9060 obstacle, or to the 0.9082 level. That level is the current highest point of April.

ECB IN THE SPOTLIGHT

“At its latest meeting, this Bank decided to accelerate its Pandemic Emergency Purchase Program in order to stop any unwarranted rise in bond yields. Although other major central banks share the view that the latest rise in bond yields around the globe just represents a healthy economic recovery, that’s not the case for the ECB. Rising bond yields in Europe have partly spilled over from US markets reacting to President Biden’s massive fiscal stimulus.

That said, PMIs since then suggested that the Euro-area economy is on a recovery mode, while inflation rose. Although several Eurozone nations are still in lockdowns, and despite ECB President Lagarde noting that any rise in inflation is likely to be temporary, the minutes of the last meeting revealed that officials discussed the idea of reducing the pace of PEPP purchases in the future. Thus, it would be interesting to see whether they will signal something like that at this meeting, or whether they will stay ready to ease further if deemed necessary. With government bond yields around the globe pulling back recently, we would see the former case as the more likely one, and if indeed this is the case, the euro is likely to continue strengthening.”

AS FOR THE REST OF TODAY’S EVENTS

Also, we will receive the US existing homes sales number for the month of March, which is believed to have declined slightly from 6.22mln to 6.19mln.

Disclaimer:

The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.07% of retail investor accounts lose money when trading CFDs with the Company. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read the full Risk Disclosure.

Copyright 2021 JFD Group Ltd.

Originally published at https://www.jfdbank.com.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
JFD

JFD is a leading Group of Companies offering financial and investment services and activities.