3 Things You Need to Know About the Market Today: Rally in China, Dollar Surge, European Gloom

1, Chinese Stocks Climb on Fresh Trade Hopes

Shanghai Composite Index CFD, 4-Hour Chart Analysis

Chinese markets opened higher following the one-week holiday break, with the Shanghai Composite hitting a marginal two-month high, trying to play catch-up with the recent surge in the key US benchmarks. Despite today’s bounce, Chinese equities are clearly in a bear market, and without an improvement in the key economic indicators that trend will likely continue in the coming months, even if some kind of trade agreement with the US is likely.

According to a White House counselor, Donald Trump could still meet Chinese leader Xi soon, despite the fact the President himself tweeted last week that there won’t be a top-level meeting before the looming March 1 trade deadline. A meeting before the deadline or even a scheduled meeting would raise the odds of an extended deadline for the ‘truce’, which could mean that the feared tariffs won’t be implemented.

2, Seventh Time the Charm for the EUR/USD?

EUR/USD, 4-Hour Chart Analysis

The EUR/USD has been drifting lower amid the 8-day rally in the Dollar index and now, the most traded forex pair is once again trading near the 1.13 level and the support zone that stopped its decline no less than six times in the past few months. With the long-term downtrend being intact, and as the Eurozone economies continue to weaken, a break below the support zone is likely close, even as the global risk rally is still not clearly over.

Below 1.13, the last line of short-term defense is found near 1.12, but we continue to expect a move below 1.10 in the coming months, and should the support zone fall, a swift move is also in the cards following the length consolidation phase. The Dollar’s rally contributed to the year-end plunge in risk assets, and as funding worries continue to linger in emerging markets and the developed credit markets, a break below support could be yet another blow for bulls.

3, DAX Tests Key Level as Risk Rally in Question

DAX 30 Index CFD, 4-Hour Chart Analysis

Besides the Dollar’s broad strength, the weakness in equities outside the US, and in Europe in particular continues, and the DAX, which has been leading global markets in recent months likely already formed a short-term top. Today, the index is at a crucial juncture, following the late-week drop, as it is testing the key support/resistance zone between 11,000 and 11,050 after breaking below it on Friday.

A slew of negative economic data from the UK casted another shadow on the state of the European economies today, with the monthly GDP print, Manufacturing Production and the prelim quarterly GDP all missing the consensus estimates, adding to the pressure on the Euro, the Pound, and stocks around the continent. With the key US indices still being in relatively strong technical positions, the whole week could be about the struggle between the long-term bearish and the mixed short-term market forces.

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.