Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Snap Plunge Hits Sentiment, Euro Gains

By Swissquote Ltd (Ipek Ozkardeskaya)Market OverviewMay 24, 2022 10:42
uk.investing.com/analysis/snap-plunge-hits-sentiment-euro-gains-200519667
Snap Plunge Hits Sentiment, Euro Gains
By Swissquote Ltd (Ipek Ozkardeskaya)   |  May 24, 2022 10:42
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The US stocks rebounded on Monday. Banking stocks rallied as JPMorgan’s CEO Jamie Dimon said that the ‘storm clouds’ may dissipate. JPMorgan (NYSE:JPM) shares jumped more than 6%.

Also, Joe Biden said that the US could ditch the tariffs imposed on Chinese imports to help easing the pressure on consumer prices. The S&P 500 gained 1.86% and Nasdaq recovered 1.59%.

Yet, Monday gains will likely remain short-lived, as the Snap (NYSE:SNAP) shares plunged 30% in the after-hours trading after the company warned that it will miss revenue and earnings, and will slow hiring. And the bad news from Snap pulled Meta (NASDAQ:FB) 7% lower in the after-hours.

As a result, the US futures point at a negative start. It’s like we are coming back to the reality after a sunny day in the markets.

ECB finally gets there!

At a blog post, European Central Bank (ECB) President Christine Lagarde revealed that she ‘expects net purchases under the APP program to end very early in the third quarter’, which would allow the ECB to raise rates at the July meeting, and exit negative rates by the end of third quarter.

That was something that many euro traders were expecting patiently since months! For now, the ECB policy tightening will likely remain gradual. The latest news suggests that the ECB would raise rates by 25bp in July and September meetings.

It’s a breath of fresh air for the euro bulls. The EUR/USD flirted with the 1.07 level yesterday. The combination of a broadly softer US dollar, and the hawkish ECB comments gave a material boost to the single currency.

But more importantly, yesterday could be the pivot point for the ECB, and hence the euro, as the ECB finally throws in the towel faced with such a rise in inflation, and that is fundamentally supportive of an extension of gains toward the 1.10 mark against the greenback.

And of course, the fact that we could soon call the end of the dollar rally is also a supportive factor for the EUR/USD outlook, which now turns neutral from negative.

And speaking of the dollar…

The US dollar index has been toppish since last week. The next technical targets stand at 101 level, the minor 23.6% Fibonacci retracement on last year’s rally, and 99, the major 38.2% Fibonacci retracement which should distinguish between the actual rally, and a bearish medium-term reversal. I don’t expect the dollar to flip to a negative trend so soon, as the Fed will certainly remain more hawkish than the other major central banks. It’s just that the others will also stop turning a blind eye on the inflation problem. And that should slow the dollar appreciation. That’s it.

The softer dollar and the cool down in the US yields help gold consolidate gains. The yellow metal advanced to $1865 per ounce yesterday and sees support near the $1850 level for a further advance toward the $1875/1880 range.

Crude oil is softer this morning, but we will certainly see dip-buyers within the $105/110 range, and Bitcoin is below the $30K. The selloff certainly has to do more with the overall risk-off mood this morning, rather than Christine Lagarde’s view that ‘the cryptocurrencies are worth nothing’. But the fact that she wants them regulated may have had a certain impact on the mood, still.

Snap Plunge Hits Sentiment, Euro Gains
 

Related Articles

Ipek Ozkardeskaya
Optimism Didn’t Last Long By Ipek Ozkardeskaya - Jun 28, 2022

Optimism didn’t last long yesterday, and the market mood turned rapidly sour, as the news flow was not pointing at sustained gains anyway! Oil and commodity prices rebounded with...

Snap Plunge Hits Sentiment, Euro Gains

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email