Consolidation days for equities – Market Overview

Consolidation days for equities – Market Overview

Shy progress is being made on the macroeconomic scale against the impending doom of the pandemic.

US equities

The market continues in risk-on mode with expectations founded on the one hand in reducing cases of contagion worldwide. However, these remain at very high levels, and in apparent progress are the negotiations for the approval of the package of President Biden's proposed fiscal stimulus of $1.9 trillion.

The US president met yesterday Monday with a representation of Republican members of Congress to advance in this regard. The markets have seen this as a gesture of cooperation between the parties that could accelerate this objective's achievement.

Due to this improvement in investor risk sentiment, both European and North American stock indices continue the modest upward path that began this week.

DowJones30, from a technical point of view, rejected the momentary break of the support located at 29861 points, a level that is still the main support area, and gains territory although still below the next level 30633, the previous support that now acts as resistance. Above we find primary resistance at the 31142 area, at historic highs.

European Indices

In Europe, the indices also experience increases although the year-on-year GDP data for the 4th quarter has been published with a worse than expected figure -5.1% vs -4.3%, an alarming figure in a certain way already discounted by the market.

In a movement correlated with the North American indices more than with the European economy's fundamental data, the German DAX 30 index has not managed to go below the main support located at 13358 points, below which the last uptrend would end. It bounces hard in the previous two days.

Above current levels, it finds resistance between the 14000 and 14122 area. This last level is the high reached in January of this year.

FX Market

In the foreign exchange market, the weakness of the Euro should be highlighted.

Unlike the stock markets, the currency does seem to notice the negative effect of the bad GDP growth and with a Dollar still demanded by the market, the EUR /USD pair in the morning has broken down the main support of 1.2065.

A daily close below this level would pave the way for further losses in the pair from a technical perspective. Below the next level of importance is around 1.1950, where the 100-day SMA line passes and is the high levels (resistance) from July to November of last year.

Sources: Investing.com, Reuters.

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