A potential banking crisis and the ECB. Those are the two big things that markets will care about today and almost nothing else will matter. It’s all very sentiment-driven at the moment and headlines (or lack thereof) are everything at the moment.
I could see this playing out in a way that European markets take in a bit more calm in the session ahead all before looking to the ECB to see if policymakers will play ball. A 50 bps rate hike may present an invitation for the jitters to return, so it will come down to the kicker that the ECB will throw along with it.
Or at least that’s what I would think that they would so, as outlined here.
The euro will be a key spot to watch today and the fall in EUR/JPY back below both its 100 and 200-day moving averages is a notable technical development. But for now, the 10 February low at 139.55 is helping to arrest the decline with further support seen around 138.00 next.
As ever the case, the bond market will remain a key driver in gauging all of this and the likes of the Japanese yen and gold will move accordingly based on that. The latter had a wild day of trading yesterday but is ultimately keeping above $1,900 for now but let’s see how things pan out in the day ahead.
As mentioned earlier as well, the general rule of thumb is that with every passing minute or hour that there is no further bad news, that is actually good news for markets and overall sentiment.
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