Financial market research and analysis

All eyes will be on the European Central Bank and Mario Draghi’s press conference today. The ECB is expected to maintain the status quo with a fairly dovish accompanying statement,. If it’s sufficiently loose, this could put the euro back into the bears’ hands.

We have seen the euro weakening below the 1.12 mark against the US dollar last week despite softening Fed expectations. The euro-dollar hit a one month low of 1.1128 on Wednesday. We may question whether or not there is more potential for a further slide towards the 1.10 mark as ECB doves could remain in charge after the ECB meeting, should the ECB sound sufficiently and convincingly accommodative.

At this stage, we do not expect the ECB to move any further for at least the next six months. This is due to a recovery in oil prices, which has partially eased deflation fears that growth figures in the EU have been better than in the US and in the UK during the first quarter and that the moderate improvement in the European credit market appears to be sustainable.

The ECB is expected to maintain the refinancing rate unchanged at 0% and the deposit facility rate stable at -0.40%. The ECB will also continue buying 80 billion euros worth of assets on a monthly basis, which now includes corporate bonds besides sovereign bonds.

From a trading perspective, the 100-day moving average, 1.1230, and the major 38.2% retracement off the February 5th peak, 1.1315, are seen as major challenges for euro-bulls. Below the 1.1315 level, the EURUSD will remain in the bearish consolidation zone and traders could tend to sell the rallies for a potential pullback towards the 200-day moving average, 1.1070, before the 1.10 mark. On the upside, stops are eyed above the 1.1315 and could help the EURUSD gather enough momentum for an advance to 1.1450 / 1.1500 zone.

FTSE shred £20 billion in two days

FTSE stocks erased £20 billion in two days as Brexit risks are being offensively priced in. Investors are curious to hear more about the Bank of England Governor Mark Carney’s thoughts, expectations and precautions regarding the Brexit today.

BP (+0.59%) and Royal Dutch Shell (+0.51%) opened in the green on hopes to see a deal sealed at the OPEC meeting in Vienna.

There is hope for an OPEC deal, yet…

Oil cheapens for a fifth day as OPEC meets in Vienna today. Saudi Arabia said to consider an agreement at today’s meeting. It could be a production target or a production ceiling. If there is a deal, it should be satisfactory. Setting the ceiling to a current historcial high will certainly not help improve the market price, therefore, traders remain sideways for the moment. WTI is trading just under the $50 level. If OPEC members fail to seal a satisfactory deal today, the $50 per barrel will remain a solid barrier.