FOREX
The US dollar edged up during early Thursday trading but remains close to its position since the end of last week. After reaching multi-month highs in mid-February, the dollar began to lose ground against other major currencies as traders adjusted their expectations regarding the Federal Reserve's timing for rate cuts. This week, the dollar's performance has been flat, with financial markets eagerly awaiting additional data before fully embracing a bearish Fed scenario. The resilience demonstrated by the US economy affords the central bank room to sustain its restrictive monetary policy for an extended period. Moreover, following February's higher-than-expected inflation reading, the Fed could still disappoint those anticipating rate cuts in the first half of the year. Against this backdrop, today's US data releases, including retail sales and PPI, may offer further insights into the Fed's decision-making process and impact the performance of the US dollar.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN STOCKS
Mixed sentiment in Asia overnight didn’t affect EU markets, where benchmarks opened mostly higher on Thursday amid lingering optimism from traders.
EU equities continue to push higher as the latest dovish statement from ECB officials fuels investors’ appetite for risk further this week. While the first dovish move from the ECB was initially expected not later than June, yesterday’s speech from an ECB Council member who recommended two rate cuts before the summer break has significantly contributed to supporting market sentiment towards share markets.
However, a lot could still happen before a proper rate cut announcement, and investors are likely to remain cautious until other ECB officials echo this dovish stance. This situation could happen today as speeches from ECB’s Elderson and Schnabel loom this morning.
Volatility may also increase in the afternoon as traders brace for another batch of significant US data, such as retail sales, initial jobless claims and PPI figures for February.
These statistics are seen as significant by many, especially the PPI reading, which will be used to determine whether or not it confirms the trend seen in the latest CPI report.
On the technical side, there is nothing threatening on the horizon for the STOXX-50 index. The market still trades inside its mid-term bullish channel, on a new historical high above the 5,000.0pts mark.
If the 4,995.0pts support level keeps the market up, the next targets can be seen towards 5,040.0pts and even 5,118.0pts by extension.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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