What are we looking at today:

  • Big risk-off trading: The US dollar is strengthening once more, but the massive standout performer in a sea of red is the Japanese yen, the ultimate safe haven.
  • Indices are falling hard again: Another big fall on Wall Street last night, with US futures lower again today. This is hitting European markets hard, with falls of over -2% across the board.
  • A massive crypto sell-off: Cryptocurrencies have been sold off significantly in the past few weeks, but the move is now accelerating. 
  • Data trading: US inflation is again key today, this time the PPI. A small decline is expected on both core and headline levels. Market reaction will likely be more muted than to yesterday’s CPI but given the implications for broader economy inflation are still important, bond yields and USD positions will be reactive.


Markets were somewhat choppy in the immediate aftermath of the higher than expected US inflation data yesterday. However, the selling pressure increasingly took hold through the US session and ended with further decisive falls into the close. This move has continued overnight and European indices are feeling the full force today. 

There has been a sharp lurch lower on US longer-dated Treasury yields which is playing into a safe haven flow. The US dollar is strengthening once more, but the Japanese yen is taking the prize as the star performer today. The big risk sell-off is also increasingly playing out in the world of cryptocurrencies too. This has resulted in Bitcoin falling to its lowest since December 2020.

US inflation is again the main focus on the economic calendar. Today, market participants will have a look at how factory gate inflation is developing. As with the consumer price inflation, the Producer Price Index is expected to show slight declines on both a core and headline basis. 

Today's news

Market sentiment increasingly negative again: Selling on Wall Street into the close and lower futures overnight have pulled European markets sharply lower in early moves today. Risk negative sentiment is also present across major forex, with the big outperformance of the Japanese yen.

Treasury yields in decline: Another strongly negative move on longer-dated Treasury yields has seen the US 10 year posting a “bearish outside day”. Coming in close succession to Tuesday’s “bearish key one-day reversal” the corrective signals are mounting. Another early sharp move lower today is adding to the fear levels across markets. The next key low to watch is 2.715%.

A new Dallas Fed President: Lorie Logan has been named as the new president. Logan replaces Robert Kaplan who resigned in the wake of a conflict of interest in a stock trading scandal.

UK GDP weaker than expected: The first reading of Q1 GDP shows +0.8% growth. This was below the consensus estimate of 1.0% (and also below the Bank of England’s expected +0.9%). GBP remains weak on the back of this.

UK/EU collide over Norther Ireland Protocol: The rhetoric is again ratcheting up, with UK Foreign Secretary Truss warning the EU that they have 72 hours to change their position on the agreement which the UK Government now does not like. The EU is threatening to retaliate and says renegotiation is not an option. This is all negative for GBP and EUR.

Cryptocurrency: getting slammed: Bitcoin continues to fall sharply, now breaking crucial support at $28,800 (July 2021 low) with the price the lowest since December 2020. Bitcoin is currently around -5% lower (but has been more than -10% lower earlier in the session).

Economic Data:

  • US PPI (at 1330BST). Year on year headline PPI is expected to slip to 10.7% in April (from 11.2% in March), with core PPI expected to also decline to 8.9% (from 9.2%) 
  • US weekly jobless claims (at 1330BST). Claims are expected to decline slightly to 195,000 (from 200,000 last week)

Major markets outlook

Broad outlook: Market sentiment is once more extremely negative across major markets.

Forex: USD and especially JPY are outperforming. AUD and NZD are underperforming. 

  • EUR/USD has, this morning, broken the range of the past two weeks between 1.0470/1.0640. Moving below 1.0470 implies a -170 pip downside target in the coming two weeks, but also opens the 1.0325 December 2016 crucial low. Intraday resistance is around 1.0470/1.0500 today, with 1.0600/1.0640 now key.


  • GBP/USD has ended a minor phase of consolidation with yet another downside break. With a break below 1.2260, the market remains on track to test the next key support at 1.2075. Rallies remain a chance to sell, with resistance mounting around 1.2400.
  • AUD/USD posted an even bigger bull failure move yesterday as the intraday rally to 0.7050 was used as another chance to sell. The market is now this morning continuing to track lower into new lows dating back to June 2020. The overhead supply is mounting too, with initial resistance of 0.6910/0.6965. The next important support is 0.6775. 

Commodities: Precious metals have stabilised to an extent, but remain at risk of downside breaks. Oil continues to fluctuate.

  • Gold picked up from $1832 to build a basis of support in the wake of the US inflation data. The positive candle posted yesterday is holding ground this morning. The primary uptrend of three years is supportive (at $1826) however, momentum remains correctively configured to suggest that near-term rallies are likely to continue to struggle. The rebound is into the resistance of old support around $1850/$1865 this morning.
  • Silver posted a positive candle yesterday but has slipped back on the broader market negative risk appetite today. Despite this, Tuesday’s low of $21.25 is still intact as a basis of initial support. The RSI remains oversold, however, any technical rally would need to overcome resistance between $22.00/$22.10 to engage a serious recovery. Under $21.25 there is little support until $19.00/$19.60. 
  • Brent Crude oil continues to fluctuate within the six-week trading range between  $99/$116. A positive candle yesterday has left support at $101.85 but the market has turned back from $108.90 to leave initial resistance today. We continue to play the range but with the market back into the mid-range pivot area c. 105/107 we are neutral again. 

Indices: Another intraday bull failure on Wall Street leaves a negative bias. 

  • S&P 500 futures posted yet another bearish session yesterday where intraday gains were sold into the close. The market is now decisively clear below 4000 with the next support not until 3843. There is also now a huge area of overhead supply around 4100.
  • German DAX posted a positive session yesterday, but it earlier gains was lost into the close. The late decline has played into today’s session too, but initial support around 13,470/13,480 is holding for now, and protect the support is at 13,270. Despite this, the outlook remains negative and with corrective configuration on the RSI momentum, rallies are a chance to sell. 
  • FTSE 100 has rolled over and with yesterday’s bull failure candlestick, the market is now eyeing a test of the recent low at 7157. Below 7157 there is support at 7051 but the market is now increasingly gathering downside momentum for what could be a retreat to the March spike low at 6755.

Support and resistance

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