Powell Hits U.S. Stocks, Dax Holds, USD Rallies

Jerome Powell delivered a speech at a virtual event held by the Wall Street Journal, and questions from the audience were expected. He began by saying that inflation will likely rise but that the Fed believes that it will be a one-off. Also, he expressed confidence that hiring in the job market should pick up soon, fueling hopes of a positive NFP report later today.

What Powell did not say was that the Fed is ready to intervene to fight the rise in the long-term yields. As soon as markets realized that stocks fell, Dow Jones dropped a thousand points before recovering some losses towards the end of the trading day.

Besides the NFP report today, the Canadian Ivey PMI may trigger some volatility on the CAD pairs. Note, however, that the Canadian job data, usually released at the same time as the NFP report in the United States, is postponed until next Friday. This month is one of the few in the trading year when this happens.

Markets to Watch

Dax, EUR/USD, AUD/USD – the markets in focus today.

Dax Index

Curiously enough, the Dax index futures did not participate in the selloff seen in the second half of yesterday’s North American session. In fact, the European futures spent the night in a tight range, with Dax holding above 14,000. The thing is that the recent weakness in the EURUSD exchange rate, now trading below 1.20, bodes well for European equities, so we should not be surprised to see a breakout above the horizontal resistance offered by the ascending triangle.

EUR/USD

The EUR/USD pair had a rough week. It broke below 1.20 and made a new low. As a funny thing, the EUR/USD pair is back to 1.1950 on the NFP day – right where it was on the February NFP day. Will it bounce or continue to the downside? Elliott Waves theory suggests more continuation to complete an intervening x-wave part of a complex correction.

AUD/USD

The Aussie appears to have broken the rising wedge on the back of the roaring dollar. More downside should find some kind of resistance to the Fibonacci levels, with the 61.8% in focus for traders with a medium-term horizon.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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