What are we looking at today:

  • USD and JPY are key outperformers today: With risk appetite plummeting, the USD is a big outperformer, with JPY also in favour.  
  • Indices are selling off sharply now: With big selling pressure on Wall Street in the past two sessions, European markets are struggling on Monday morning.  
  • Data trading: The result of the French Presidential election has done little to stabilize European assets this morning. There is little on the economic calendar to distract markets from the selling pressure.


Market participants have been hit by a wave of early selling pressure on Monday morning. Big falls on Wall Street into the close on Friday have weighed on risk appetite early in the new trading week. This is driving flow into key safe havens such as US Treasuries, the US dollar and the Japanese yen. Assets deemed to be higher risk are suffering, with the Aussie and Kiwi underperforming major forex, along with sharp declines in commodities and indices.

The French election has returned Emmanuel Macron for a second term in office. This is the continuity result for France and will have come as a relief to markets. However, polls had favoured Macron in recent days and this has done little to bolster European markets that are under pressure from the broader risk sell-off. 

The economic calendar is fairly light today. The only entry of note is the Dallas Fed Manufacturing index which is expected to improve slightly in April. 

Today's news

Market sentiment under pressure: Anything deemed higher risk is being sold. Anything deemed to be a safe haven is seeing positive flow.  

Treasury yields are falling: US Treasuries are seen as a safe haven and so are being bought. This is dragging yields lower, with the 10yr yield -8bps this morning.  

Macron wins the French Presidency again: Macron wins c. 58% of the vote in the second-round run-off. This has been broadly priced in recent days and has done little to move markets today.  

German Ifo Business Climate with a slight beat: The Ifo has come in at 91.87 in April. This was above the 89.1 forecast and above the 90.8 from March.  

The FOMC is now into its blackout period: The next FOMC decision is on Wednesday 4th May and the committee is now into its blackout period, meaning no communication until the meeting.  

ECB President Laragde on energy prices: The ECB chief has noted that higher interest rates will not lower energy prices.  

Cryptocurrency slides on risk aversion: Coins are all lower. Bitcoin has struggled to reclaim $40,000 in recent sessions and has this morning dropped below $38,500 to trade at levels not seen since mid-March.

Economic Data:

  • Dallas Fed Manufacturing (at 1530BST). Consensus is looking for an improvement to +12 in April (from +8.7 in March)

Major markets outlook

Broad outlook: Market sentiment is decisively negative

Forex: JPY and USD outperformance once more, with AUD and NZD the main underperformers.

  • EUR/USD has reversed sharply lower in the past three sessions and has sold decisively below 1.0757 support this morning. This is now at two year lows and the pandemic reaction low of 1.0635 is the next crucial support. Old support of 1.0757/1.0805 now becomes a basis of resistance and 1.0940 will be considered a key lower high. 
  • GBP/USD has been slammed lower since decisively breaking the 1.3000 support on Friday. The next key support is around 1.2675 from September 2020. The RSI is around 30 and is a point where key sell-offs have turned higher in August 2019 and February 2020, but for now, the focus is on testing supports.
  • AUD/USD has sold decisively lower in the past few sessions and has blown any positive outlook out of the window. A close below the important support at 0.7165 would be the next decisive breakdown. Near term, momentum is oversold and this could make for some elevated volatility swings, however, a new trend lower is forming and rallies will be seen as a chance to sell. Initial resistance is around 0.7250.

Commodities: Silver has been hit by renewed negative risk, and even gold is being dragged lower. Oil is also suffering and is eyeing its March/April lows.

  • Gold has fallen over the past week and after turning decisively lower on Friday the market is again lower today for a test of the key support that starts around $1915. In the past few months, the buyers have returned in the range of $1890/$1915 and the price has not closed below $1915 since 25th February. However, the RSI is leading the market lower and suggests that a breakdown is a growing risk. Resistance of old support between $1926/$1939 is now a barrier to recovery.
  • Silver has accelerated lower in recent sessions and has now decisively broken the support at $23.83/$24.12. The move has changed the outlook and oversold rallies are likely to now struggle. How the market reacts to these old levels of support will be a gauge in the coming days. The next support is around $22.80/$23.30.  
  • Brent Crude oil has broken the support around $105/$107 and this has now opened pressure down towards the key March ($98.00) and April ($99.35) lows. The old pivot area around $105/$107 is now an initial basis of resistance. 

Indices: Sharp selling pressure has taken hold in recent sessions and has continued into Monday morning.

  • S&P 500 futures have turned sharply lower in the past few sessions and the futures are lower again this morning. If this move continues there is potential for a test of the crucial 4090/4140 support area that was formed in the reaction to the breakout of the Ukraine war in February/early March. Reaction to oversold intraday moves will be a gauge. The first real resistance is at 4355/4385.

S&P 500 futures

  • DAX has fallen back to test the support at 13,885 this morning. So far this has only been minorly breached before an intraday rebound. However, there is little appetite to support a recovery yet, with resistance initially around 14,040/14,135. A close under 13,885 would open 13,575 next support and confirm that rallies are a chance to sell.
  • FTSE 100 has come under considerable selling pressure in recent days and suddenly this is an underperforming market. Support levels at 7485 and 7422 have been breached and the outlook is now one of selling into intraday rallies. This leaves 7422/7485 as a basis of overhead supply and resistance initially. A retreat towards 7220/7265 is now looking increasingly likely.  

Support and resistance levels

This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.