While Wall Street continues to celebrate new record highs, European stock markets are still struggling to find a clear direction. Investors are likely to stand on the sidelines ahead of the FOMC meeting and the upcoming peak of the US earnings season, with the consolidation set to continue over the next 24 hours.
Nevertheless, market participants are hopeful that a dovish Federal Reserve and strong corporate earnings will not just give US markets a boost but also transfer the upbeat mood into Europe. DAX traders are looking for a symmetrical triangle breakout. To the downside, the key support zone bulls need to defend is 15,000-15,080. Key resistance lies at 15,411 points, followed by the all-time high at 15,528 points.
The UK100 has been on a steady recovery course in the past few months, but the momentum has almost vanished recently. The index is testing a key resistance zone between 6965 and 7036 points, which was an area of key support prior to the March 2020 crash. Should the UK100 overcome this hurdle, it would signal that the index is ready for the next leg higher, with 7732 being the target for bulls. To the downside, imminent support is seen at 6815/6837 points, followed by the rising trendline from the January 21 low.
Copper continues to march higher as market participants are speculating that stimulus measures will fuel the global economy recovery and push demand for commodities to a new high. Despite Copper looking slightly overbought in the short-term, the uptrend is not showing any signs of weakness yet. Traders are looking for opportunities to buy the dip, and are likely to keep an eye on the former key resistance level at 4.37.
The Federal Reserve is likely to deliver a dovish message today, which should keep the US Dollar under pressure in the near-term. The Euro is set to benefit from this, and the vaccination campaign in the EU gaining momentum will give the currency an additional boost.
The current uptrend looks healthy, and the Daily RSI is not signaling overbought conditions yet. The resistance zone between 1.21 and 1.2110 is the next major challenge for EUR/USD, but it shouldn’t have too many difficulties overcoming this hurdle if the Federal Reserve sticks to its dovish stance. A continuation of the rally towards 1.2242 would appear likely in such a scenario.
Rising Oil prices are boosting the Canadian Dollar, and with risk appetite on the rise it’s worth having another look at CAD/JPY. The currency pair recently broke above the falling trendline from the April high and a test of the 88.30 level seems imminent. CAD/JPY is likely to encounter strong resistance ahead of this level, but the odds of a breakout have improved as rising commodity prices should keep the Canadian Dollar supported, while the upbeat market mood means that the Japanese Yen is out of favor.
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USD regains ground on April inflation figures to outperform low-yielding currencies; EUR/USD meets strong resistance; Gold looks increasingly attractive