Today's calendar of economic figures is very scarce, highlighting only consumer confidence in the Eurozone, which is expected to continue improving from the negative levels it has been in previous months.
Yields on US Treasury bonds are on the rise again after the initial sharp rise and the subsequent decline that took place after last week's Federal Reserve. The 10-year US bond is already trading back in the 1.50% zone after the market appears to digest and accept the hawkish inclination of many members of the Federal Reserve. Opinions in the market remain diverse, but a change in the Federal Reserve's bias towards an advance in the reduction of asset purchases and the date of interest rate hikes is what seems to be prevailing, according to the statements. Moreover, reports from the main investment banks are to be published these days.
The Federal Reserve president, Powell, appears this afternoon before a congressional subcommittee in which he will discuss the response to Covid and economic developments. From his statements, the market could obtain additional clues about a potential change in Fed's policy. In his remarks after last week's meeting, Powell acted as a moderator without clearly defining himself and even ruling out a drastic change in monetary policy. In short, he will always try to avoid creating abrupt movements in the market. Therefore, a radical change is not expected in today's appearance, but it could gradually move towards a more hawkish position. In this sense, the employment figures to be published at the beginning of next month will play a fundamental role and could be the catalyst for new trends in the stock markets.
The DowJones30 index experienced a corrective upward movement yesterday after last week's continued losses that worsened after the Federal Reserve meeting and has technically leaned in the area where the 100-day SMA line passes, which acts as support right now. Below, the next point of technical support is around the 32230 area.
This index would be one of the most affected by a more restrictive monetary policy as it is composed of more cyclical stocks.
The dollar also experienced a downward technical correction after an impressive strengthening in recent days. As a result, EUR/USD reached the resistance zone located at 1.1920 and the beginning of the session, it resumed its previous bearish path. The immediate support level is at 1.1850, below which further losses open to the 1.730-1.1750 area from a technical perspective.
Sources: Bloomberg.com, reuters.com