After selling pressure into the close on Friday, market sentiment has looked more encouraging on Monday morning. The prospect of a meeting between Presidents Putin and Biden has allowed markets to be more hopeful of a peaceful resolution. This is encouraging a rebound on indices and pro-cyclical major forex. Haven plays such as gold, JPY and USD are performing less well. How long this improved sentiment lasts would be a difficult question to answer.

The economic calendar is focused on European flash PMIs today. Beyond that, it is Presidents Day public holiday for the US. This means that we can expect thinner markets that trade with less liquidity but due to the geopolitical tensions this could mean potentially more erratic volatility (although markets are usually subdued on US public holidays).  


Sentiment improves… for now: After selling pressure ramped up into the end of last week, a near-term rally for market sentiment today. Given how skeptical markets now seem to be of a sustainable resolution, this may only be a near-term move.

Treasury markets closed: It is Presidents Day and bond markets are shut in the US. [Risk uncertain] 

Ukraine tensions are still highly uncertain: There have been reports of fighting between the two sides in recent days. However, with both Putin and Biden agreeing to the prospect of a meeting, this could be a more encouraging sign. 

Eurozone flashes PMIs mixed to positive: The flash Manufacturing PMI has come in a shade lower than forecast at 58.4 (58.7 forecasts), but with Services better at 55.8 (52.0 exp) this means the flash Composite PMI is up to 55.8 (52.7 exp). This suggests the Eurozone is picking up activity. [EUR supportive]

US Presidents Day: US equity futures are trading today, but bond markets and Wall Street indices are closed. With US trading desks out, this will mean lower volumes and thinner market liquidity. With the geopolitical tensions of late, this could be erratic volatility on markets. 

Cryptocurrency intraday rebounds: Crypto continues to trade as a risk positive play. Selling into the weekend and an intraday rebound this morning. However, the near-term outlook remains pressured to the downside.   

Economic Data:

  • UK Flash PMIs (at 0930GMT). Manufacturing PMI is expected to improve slightly to 57.6 (from 57.3) with Services PMIs improving to 55.0 (from 54.1) and Composite PMI up to 55.3 (from 54.2)). 


Broad outlook: An improvement in risk appetite today, but it may just be a near term move

Forex: European indices and US equity futures are higher, with JPY and USD underperforming on major forex.

  • EUR/USD has been uncertain for the past few sessions but is once more rebounding today to test the resistance around 1.1385. A close above 1.1395 would suggest building traction for the top of the trading range of 1.1120/1.1495. For now, we are neutral. Initial support is at 1.1315 with 1.1280 key near term.
  • GBP/USD is still again back higher to test the resistance of the mini range of the past few weeks at 1.3645. With technical signals on daily and 4-hour charts are beginning to show signs of improvement. A close above 1.3645 opens 1.3750.
  • AUD/USD has built higher lows in the past few weeks. A test of near-term resistance between 0.7225/0.7250 is building and above there would open the key medium-term resistance at 0.7315. Momentum is improving, but RSI needs to move into the 60s to suggest sustainable positive traction. Initial support 0.7140/0.7150.

Commodities: Precious metals are pulling back after recent gains, with oil still choppy and uncertain.

  • Gold has been positive and despite a near-term slip back this morning, the strength of the run points to a continued test of $1900/$1916 (May/June 2021 highs). Initial support $1886. Charts on daily and 4-hour time scales suggest that weakness is a chance to buy still.
  • Silver has continued to find buyers into weakness and the move above $23.99 has opened upside towards $24.70. Momentum may not be as strong on silver as it is for gold, but technical signals remain positive. Initial support is at $23.58 with $23.07 a key higher low for the recovery.
  • Brent Crude oil has seen the uptrend looking less secure in recent sessions as momentum has tailed off. However, the support at $90.40/$91.00 has held firm and this retains the positive bias. If this support were to be breached though it would form a topping pattern and point towards correction. In the meantime, the market. is edging higher today but resistance at $96.40 needs to be breached to re-engage better momentum again.

Indices: US futures are rebounding after Friday’s weakness. European indices are also higher, but the gains look tentative.  

  • S&P 500 futures have been trending lower in the past week with lower highs and lower lows. Resistance has now been left between 4438/4484 and momentum is increasingly negatively configured with rallies seen as a chance to sell. Another bull failure below 438 opens the key lows of 4212/4263.

S&P 500 Futures

  • DAX has again found willing buyers below 15,000 but there is a decisive resistance of a 6-week downtrend (c. 15,440) overhead pointing to rallies being seen as a chance to sell. Already this morning’s rally is well off session highs leaving resistance at 15,241. Support at 14,927.
  • FTSE 100 has been threatening a near-term top pattern and needs a close under 7485 to complete the top. This would then imply a further retreat of c. -210 ticks. The early rebound this morning is already beginning to struggle, leaving resistance at 7566.

Support and Resistance levels