Pre Market: Euro Slumps on Dovish ECB-Minutes as Trump Trolls Markets

US stocks continue to go nowhere in a very choppy fashion, as trade war fears and the Syria-related tensions continue to cause wild swings in equities around the clock. While we have been expecting a hard-to-trade period thanks to the conflicting short- and long-term signals, the recent days made our head spin too.

S&P 500 Futures, 4-Hour Chart Analysis

We still think that defense is the name of the game for short-term traders until a clear momentum move out of the current range, but looking under the hood, could help us anticipate the direction of the coming swing.

To spoil the result, we are leaning towards a bullish resolution of the current setup, as sentiment is still clearly negative, and good short trades are usually initiated in calm, confident markets. What also makes us slightly positive here, is the fact that the leaders of the correction (European and Asian stocks, commodity currencies) didn’t break down despite yesterday’s dip, holding on to most of their recent gains.

DAX 30, 4-Hour Chart Analysis

That said, we wouldn’t go all in here, and a clear breakout to a new swing highs by the major indices would be needed for a trend change, while another failed move would be a bearish sign. Today’s session could bring some clarity, as equities are trading near the upper boundary of their ranges after the dovish ECB meeting minutes, and those who fancy shorts, could a good entry point in the case of a failed breakout.

Meanwhile, the POTUS is definitely enjoying the spotlight, as his often contradicting war- and trade-related tweets are in the center of attention. Trump kick-started today’s bounce when he took a step back after yesterday’s “the missile’s are coming” stance, and tweeted that it’s there is no decision on an attack, it might not happen at all. We just have to wait and see when the next tweet-missile will be launched, as we are quite sure that it will be soon.

Risk Assets Mostly Positive

EUR/USD, 4-Hour Chart Analysis

The weakness of the European common currency is the most important trend in forex markets so far today, as, despite yesterday’s rate hike rumors, the minutes of the latest meeting of the central bank showed considerably doubts regarding growth and inflation.

The EUR/USD pair pulled back to 1.23 again, as it continues to trade in the trading range that we have been monitoring for months now. As the current moves still qualify as noise, we still urge traders to remain patient concerning the most popular currency pair.

USD/JPY, 4-Hour Chart Analysis

The Japanese Yen and gold are both trading lower after yesterday’s safe haven rally, as the imminent threat of the widening of the Syrian conflict eased, but we wouldn’t rule out another quick change in sentiment, even as early as today, and the precious metal remains one of our favorite bets in the current environment.

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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.