The market reaction to the FOMC meeting minutes was muted. There were no real surprises. The minutes showed that taper talks are intensifying and that most members see the conditions for beginning to unwind their ultra-loose monetary policy might arrive earlier than anticipated at previous meetings.
However, market participants were already prepared for this following the Fed´s hawkish surprise three weeks ago. There were no indications that the central bank might shift even further to the hawkish side, and the equity markets reacted positively.
The USTECH index extended gains and is marching towards the psychological resistance level at 15,000 points. To the downside, imminent support is seen at 14,628 points, followed by the rising trendline from the late May low. Stronger support can be expected at 14,430 points. The short-term outlook remains positive as risk appetite is rising again, and the charts are hinting at further gains too.
While technology stocks remain in demand, value stocks have lost their appeal in the last few trading days. The US2000 index ran into strong resistance at 2368 points and failed to regain momentum since then. Negative momentum is building up now and traders are keeping a close eye on the rising trendline from the January low. A break below this line would pave the way for a correction towards the psychologically important 2000 level, with the 200 DMA not far behind.
Oil prices remain highly volatile. Traders are waiting to see if OPEC+ will eventually agree on an output hike. In the meantime, there is likely to be a lot of noise around how the organization will deal with the current deadlock, which could lead to wild price swings.
The prospect of another major coronavirus wave and new restrictions are also weighing on Oil prices. USOIL extended losses to $70.53 today, and traders are now focused on the $68 support level. A clear break below this major line of support could signal the beginning of a deeper correction.
With Oil prices under pressure and the Japanese Yen in demand amid a slight risk aversion in the FX market, pressure on CAD/JPY could intensify in the coming days. Key support is seen at 87.94, and breakout below this level could quickly lead to a test of the 85.44 level
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With equity markets rising to fresh record highs in the United States and Europe, risk appetite is rising again