Markets eye FX options Expirations

Midday Update

European stocks were trading lower during European Session open as futures and FX options for January are going to expire early US session opening. The FTSE traded lower from yesterday high at 7596.7 and a drop towards yesterday lows 7330.3 is likely with the current price is trading at 7466.5.

The DAX opened the session bearish with sellers pushing the price from 15583.99 to the current price at 15254,559. The index could go lower towards 15135.748 to fill up a gap created during Tuesday Open.

The currency markets continued with risk off during European session post Fed remarks on interest rates hike as early as March 2022. The USD Index traded higher above its 7 months high after breaching 96.92 near-term resistance and the current trend could surge towards June 2020 highs at 97.80.

The Dollar remains overbought in the near-term and the current trend remains susceptible to price correction. US Core PCE index for December are due for release early New York Session and traders should watch out for volatility.

There is not much hope for a comeback on the EURUSD as the pair trades below 1.1180 critical support. The selling pressure on the EURUSD is also inspired by FX Options expiration today ahead of the EU interest rate policy results due for release next Tuesday.

However, the EURUSD pair has found a near-term support at 1.1140, although the prospects of a further downward pressure towards 1.1150 remains probable as EUR economic sentiment and GDP data came out worse than expected.

Most US Equities opened lower in European session with Nasdaq 100 Index selling off from an immediate resistance at 14423.34. Investors are juggling around the positive economic news from Thursday better than expected US GDP that is reinforcing an early rate hike as inflationary pressure leaves the FED with limited options but to act.

The US 10-year treasury note rose 2.11% since morning towards its February 2020 highs. Bond yield surges higher and investors begin to look elsewhere for lucrative returns other than the stock market since inflationary pressures and higher interest rates are bad news for the stock market.

Gold reinforces a bearish outlook in the near-term as it attempts to break a 5 week’s low at $1782. The yellow metal’s failure to trade above 1800 early European session gives bears indications of a further downside pressure as bulls loses steam.

USWTI is currently in a consolidation after prices shaded off its Thursday gains from $88.00.