What are we looking at today:

  • USD is looking to strengthen once more: A decisive deterioration in risk appetite has once more seen flow back into the USD
  • Indices under renewed selling pressure: Wall Street fell hard yesterday amid worrying corporate earnings from Target. This sell-off has smashed recovery prospects as selling into strength once more takes hold.
  • Crypto has fallen over with the deterioration in risk: As risk appetite falters, so does crypto. Any further deterioration in broad sentiment will hit cryptocurrencies again.    
  • Data trading: The ECB meeting minutes will impact EUR later this morning. On the data front, jobless claims appear to be relatively settled now and do not tend to move markets too much. Subsequently, after Monday’s massive negative shock in the New York Fed data, the main focus will be on the Philly Fed. Another negative surprise would be risk negative.  


Risk appetite has once more taken a beating as enormous selling pressure flooded through Wall Street into the close last night. Fears over pricing pressures in the corporate results for US one-stop-shop, Target, caused a wave of sell-orders on Wall Street and a flight back to safety across major markets. The USD and JPY were the go-to assets on major forex, whilst gold held up well and crypto once more found renewed selling pressure. 

Selling pressure was contained in the Asian session this morning after the announcement of Shanghai re-opening after COVID lockdowns. However, as the European session has taken the reins, the negative risk appetite is swelling once more across equities. Interestingly though, there is a mild kickback against the USD strength still in force. The question is, can this hold if sour risk appetite hits Wall Street hard again. 

The economic calendar has several lower-tier US data today. However, first up, the ECB meeting minutes will drive the EUR just before the US session. If there is any hawkish swelling on the Governing Council it would add support to EUR. Weekly jobless claims are expected to once more be around 200,000. The claims have stabilised in recent weeks, and this is around where the 4-week average is expected to be too. After the dramatic deterioration in the New York Fed Manufacturing data on Monday, the focus will be on whether the Philly Fed follows suit. A slight reduction is expected but to remain solidly positive in May. A downside surprise would add more seeds of doubt for US economic growth trends into the belly of Q2.    

Today's news

Market sentiment has soured significantly: Indices are feeling the brunt of selling pressure in Europe, with US futures again lower by more than -1%.

Treasury yields have dropped but are relatively stable today: Longer-dated yields dropped yesterday (US 10yr -bps) but are reasonably stable this morning. If this remains the case, it should help with broader market stability. ,

Shanghai gradually starting to re-open: Having endured some stringent lockdown measures as a result of the zero-COVID strategy, the vice-mayor of Shanghai has announced the resumption of work and is to gradually restore inter-district public transport. This has helped to settle market sentiment in Asia this morning.

Australian unemployment in-line: Unemployment remained at 3.9% in April, which was as forecast. The Participation Rate has dropped slightly to 66.3% (from 66.4%).

Cryptocurrency negative bias resuming: Selling pressure has once more taken over across the crypto space, once more re-affirming the strong positive correlation between Bitcoin and NASDAQ. Although Bitcoin has found stability this morning, just above $29,100 further declines on NASDAQ will drag it lower.    

Economic Data:

  • ECB Monetary Policy Meeting Accounts (at 1230BST) 
  • US Weekly Jobless Claims (at 1330BST). Consensus is expecting a marginal reduction in claims to 200,000 (after 203,000 in the previous week). 
  • US Philly Fed Manufacturing (at 1330BST). Analysts are expecting a slight deterioration to +16.0 in May (down from +17.6 in April)
  • Existing Home Sales (at 1500BST). Sales are expected to decline by -2.5% to 5.60m in April (down from 5.77m in March)

Major markets outlook

Broad outlook: A massive Wall Street sell-off is not done yet, with US futures lower again. Indices are feeling the brunt of the selling, although interestingly, forex having a muted reaction, so far.

Forex: USD was strong yesterday but is giving back some of those gains this morning. USD is underperforming all major forex. 

  • EUR/USD retreated sharply back below the 1.0470/1.0500 near-term pivot band. This will have disappointed recovery prospects, but with the pair supported overnight, if 1.0460 (yesterday’s low) can hold then there is still bullish hope. There is initial resistance forming at 1.0505 which will need to be overcome to re-engage the positive momentum again. Losing 1.0460 re-opens 1.0390/1.0420. 
  • GBP/USD fell decisively yesterday to break back below 1.2400 which, as a near-term pivot, will be seen as a negative gauge now. Despite this, a pick-up from 1.2330 at least generates some encouragement for recovery again. A move above 1.2435 would be needed to suggest the move is serious. Below 1.2330 resumes the run of lower highs and lower lows.
  • AUD/USD has posted a “bearish engulfing” candlestick around the 0.6965/0.7030 resistance area. This seriously threatens the recovery. Picking up from 0.6950 today, the market needs to now hold this level if any prospect of recovery is still live. A failure below 0.6950 (especially on a closing basis) would be a renewing bear signal and re-open 0.6870 initially. 

Commodities: Precious metals have been relatively steady through the renewing negative risk sentiment. Oil has once more reversed back towards the middle of the seven-week range.

  • Gold continues to trade under the old medium-term pivot at $1830/$1850 and the old three-year uptrend is also now a basis of resistance too. However, the market has been reasonably stable in eh past 24 hours, lacking decisive direction. There is a negative bias still which points to using rallies as a chance to sell, but the support at $1807 is still holding as initial support. Resistance at $1825 and then $1836.
  • Silver has been drifting back from the resistance of the overhead supply between $21.40/$22.00 but without any serious selling pressure yet. We are watching the reaction around near-term support at $21.18/$21.28 as a breach would open the way to retest $20.84 and then the recent low at $20.45. Key near-term resistance is at $21.90/$21.95.
  • Brent Crude oil has once more seen a rally towards the resistance of the seven-week trading range between $99/$116 faltering. The market has now posted two negative daily candlesticks and is set to unwind once more back to the mid-range pivot area between $105/$107. 

Indices: A massive Wall Street sell-off has dragged markets lower once more. 

  • S&P 500 futures fell over -4% yesterday to completely scupper any recovery prospects and with futures again lower today a retest of the low at 3854 appears to be imminent. The bulls are just unable to find any stable ground for a sustainable rally, with any strength seen as a chance to sell. Initial resistance is now 3960/3980. Below 3854 means 14-month lows, opening 3820 and perhaps 3720. 

S&P 500 futures

  • German DAX had looked in a strong position until the Wall Street sell-off yesterday. An overnight rebound has not lasted long and further selling this morning has now dragged the market back below a pivot support area at 13,800 which puts an end to the immediate recovery prospects. A retest of the initial higher low at 13,470 could now be seen. Initial resistance is at 13,925. 
  • FTSE 100 has fallen over sharply in the past 24 hours. Forming a bearish engulfing one day candlestick yesterday, a bull failure to an overnight rebound has seen the selling pressure ramp up once more. A test of the 7157 key support could now be seen. Initial resistance is at 7400. 

Support and Resistance levels

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