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Equity markets worked very hard to try and make up the ground that was lost in the morning session. The bounce back in the latter half of the trading session pales in comparison to the heavy losses that were sustained shortly after the market open.
Traders are losing faith in central banks’ ability to bring stability to their respective economics and stock markets. Janet Yellen has her second day of testifying in Capitol Hill and the Federal Reserve chair refused to rule out negative interest rates.
There is no suggestion that the US central bank is considering going down that route but it gives an indication of what tools are available. The very mention of negative rates will keep pressure on equity markets, and while the FTSE 100 is under 5600, its outlook will be bearish.
The downward trend that the US 500 and Wall Street have been in since early February still stand and bounces could see more bears enter into the fold.
EUR/USD continues to creep higher due to the dollar’s weakness. The upward trend is still in place and buying the dip has been a popular strategy. The bulls will be looking towards $1.14 and while it holds above the support of $1.1252 it is a possibility.
Gold is reaping the rewards of the risk-off strategy and the precious metal is currently at a one-year high. The weakness in the US dollar and the fear in stock markets is fueling the buying. If the metal holds above $1229 additional a continuation of the upward trend is possible.
Oil is still heading south and the bears will be looking toward $30 on Brent and sellers will be keeping an eye on $27.58 for US light crude.