Pre-Market Analysis And Chartbook: Another Bounce Fizzles Out as Dollar Hits 2-Month High

Wednesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,735 -0.39%
DAX 30 11,370 0.85%
WTI Crude Oil 66.77 1.01%
GOLD 1,232 -0.04%
Bitcoin 6,427 0.53%
EUR/USD 1.1400 -0.60%

While yesterday the US session ended with a major short squeeze, today, risk assets are under pressure again. Asian equities were volatile with a bearish bias, as the Nikkei underperformed while Chinese stocks were flat on the day. The positive momentum was short-lived, even as the major European benchmarks are relatively strong today, trading slightly in the green.

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

From a broader perspective, European assets are very weak, with even the safer EuroStoxx 50 hitting marginal new correction lows this week. Today the mega-cap benchmark has been choppy so far, but and it continues to trade below the recent swing low, with all eyes on tomorrow’s European Central Bank meeting.

The Euro is also down significantly, breaching the short-term support level near 1.1440 in the EUR/USD that held up the common currency in recent weeks, with the pair trading with a 1.13 handle for the first time since mid-August.

The Euro’s weakness could help European stocks, but as the selling is due to the rise in systemic risks amid the Italian budget debate, the currency and equities are currently falling hand-in-hand. The much worse than expected German and Eurozone Manufacturing and Services PMI also added to the selling pressure today, as the global weakness is starting to hurt economic growth in Europe too.

DXY (Dollar Index), 4-Hour Chart Analysis

The broader Dollar Index (DXY) is also meaningfully higher today, rising to yet another 2-month high and eyeing the August highs, despite the recent pullback in Treasury yields. While the long-term trend is clearly bullish in the reserve currency, this week could still hold surprises thanks to the ECB meeting, and even a larger scale pullback could start, should the central bank cause a major hawkish shock.

The test of the highs is still the most likely scenario in the coming weeks, but short-term forex traders should be aware of the increased risk of volatile spikes towards the end of the week.

US Futures Point Lower but Tech Giants Stable Before Key Earnings

Nasdaq 100 Futures, 4-Hour Chart Analysis

US stocks are well below yesterday’s closing prices and the lack of follow-through could mean that we are in for yet another volatile session on Wall Street. There are still mixed short-term signs, with particularly the relative weakness of small-caps being worrying for bulls.

On a positive note, the Nasdaq is performing slightly better technically speaking, and the Nasdaq 100 is outperforming the broader Nasdaq Composite as the largest names are more stable following a bearish period. Microsoft (MSFT) is scheduled to report after the bell today, while Amazon (AMZN), Google parent Alphabet (GOOG), and Intel (INTC) are publishing their quarterly numbers tomorrow, and those earnings could be crucial for the tech benchmark.

GBP/USD, 4-Hour Chart Analysis

Besides the Dollar’s strength, currencies are relatively quiet today, and commodities are also little changed after yesterday’s volatile session. That said, the weakness in the Great British Pound is also apparent, and besides the broader European troubles, the threat of a no-deal Brexit is also weighing on the currency, which slid to a 7-week low against the USD today, briefly violating the 1.29 level after trading as high as 1.325 earlier this month.


Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis


EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis


WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

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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.