While tech’s high valuation has prompted a wave of profit-taking, stocks in traditional areas like energy and hospitality have bounced back in anticipation of a normalized economy.
Though it might be too soon to say that growth stocks have lost favor. 12200 is the next stop as the correction goes on. A failure to rebound could trigger a 20% drop to 11000 from February’s high.
On the upside, a recovery will need to lift 13320 first.
EURUSD pauses as ECB policy looms
The euro came off its three-year high as traders look for divergence between the two economic entities. ECB officials’ recent comments led to believe that the central bank may adopt a ‘too much is better than too little’ policy by maintaining its liquidity support.
While across the Atlantic a drop in jobless rate last month further raised the hope that America is getting back on its feet, such a dovish stance could weigh on the single currency.
The bearish RSI divergence at 1.2350 already suggests a deceleration in the rally’s momentum. 1.1900 is the intermediate support and its breach could trigger a sell-off into the 1.16s.
UK OIL rises on tight supply
While most commodities came under pressure from a soaring US dollar, oil prices continue on their upward trajectory thanks to tightly controlled supply.
OPEC+ has extended output cuts into April as global demand slowly recovers. As long as US shale producers don’t undercut their efforts, prices may stay well-supported.
Now that the Brent crude is reaching January 2020’s high, the supply gut will need to be enforced to contain profit-takings.
The price is likely to meet stiff selling pressure near 71.00 from those who rode the ten-month-long recovery. 62.00 around the rising trendline is the immediate support in case of a retreat.
USDCAD dips on oil rally
Among this week’s events, the BOC is likely to stay put and reiterate its intention to keep the rates low until 2023. A drop in the unemployment rate could raise intraday demand for the loonie.
The pair is testing the year-long bearish trendline, and a pop above 1.2750 could set a reversal in motion as sellers start to cover their bets. 1.2480 is a close support for those buying the dip.