Pre Market: Stocks Rally, Euro Jumps as Trade Wars Still In Focus

US Stocks extended their late-Friday bounce before the opening bell and in the first hour of trading today, as the main US and global indices are all trading modestly in the green, with Europe notably underperforming. On a bullish note, the Nasdaq is performing better than the rest of the market, and from a day-trading perspective that could justify a slight bullish bias today.

S&P 500 Futures, 4-Hour Chart Analysis

The Euro hit a one week high against the Dollar above the 1.23 level, but the most traded pair is still in a broad range pattern with no clear directional momentum, so for now, we wouldn’t bet on a continuation of the move.

DAX, 4-Hour Chart Analysis

The media and investors are still clearly focused on the US-Chinese tariff war, but with no major announcements over the weekend (besides the rumors regarding a possible devaluation of the Yuan), the market is awaiting a speech by Xi Jinping tonight, with a likely response to the latest round of tariffs by the President. Meanwhile, the technical setup is little changed on Wall Street with the most important benchmarks hovering slightly above the February low, in a volatile range.

The overall picture remains mixed, but still oversold after the deep correction, so traders should still be cautious with both long and short positions as the consolidation will likely continue. A clear break below the lows could point to a huge change in the technical structure of the market, but given the still bearish sentiment, we still expect a rough ride for shorts, and the long-term uptrend remains intact in equities.

Risk-On Assets Slightly Higher Across the Board

AUD/USD, 4-Hour Chart Analysis

As the Dollar retreated against most of its peers, and the Yen remained under pressure too, risk-on currencies gained ground although the changes are not meaningful, and we expect cautious trading in currencies up until Wednesday, the Fed releases its meeting minutes, right after the US CPI report, with both events having the potential to stir up financial markets.

WTI Crude Oil, 4-Hour Chart Analysis

Commodities are also still range-bound, with crude oil pushing higher following the alleged Israeli air strike in Syria, while gold is virtually unchanged despite the Dollar’s weakness as the slightly better sentiment is weighing on the precious metal.

All in all, until the short-term range in equities is intact, around 2550-2675 concerning the S&P 500, all bets are off regarding the next big momentum move, and choppy trading will likely continue.

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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.