Weekly Outlook | Geopolitical tensions in focus 

Important events this week: 

Last week, financial markets only showed limited volatility. Most assets remained in a sideways pattern and markets have calmed down after the recent rise in volatility. US equities continue to trade in a sideways pattern, after having traded back at higher levels again. Worth noting that the German DAX has been able to trade higher remaining close to the 50- moving average based on the daily chart. Lower interest rates and the chances of a better economy recovery might still cause investors to favor European equities. 

Positive signs might come from oil prices, though. USOUSD continues to trade higher. Especially last week on Friday the upside potential has increased again. Technical patterns based on the weekly chart continue to suggest that upside momentum might be found. This, in turn, would also suggest that equities continue to rise. 

The economic calendar will remain data- light this week. We will continue to focus on the purchasing manager index from the Eurozone and the US.  

– EU- German Flash Manufacturing- The Flash manufacturing PMI data from Germany is expected to show a contraction down from 48.3 to 47.5 this month. Data from the EU still continues to disappoint, with in particular the reading from the UK remaining at lower levels. 

Falling interest rates compared to the US might still give the economy some advantage, however, US trade wars and the war in the Ukraine continue to disappoint. Yet, the German DAX seems to response positive for now. Unless the index falls to lower levels again the upside should still be intact. 

Based on the weekly chart above the market continues to bounce off the 50- moving average, signalizing further upside potential. The positive sentiment might increase above the 22.000 level and a better than expected reading could intensify this trend. The PMI index will be published on Wednesday, 23 April at 09:30 CET. 

– US- Flash Manufacturing- The US counterpart of the reading is expected to come in at 49.3, which also marks a decrease from last month. Obviously the newly implemented tariffs from the US might also play a role here. As the sentiment remains rather negative for the US economy also the index might show a weaker sentiment. 

The USDJPY currency pair above shows that the JPY might start to gear up more traction here. A break of the important support zone at 140.80 might cause the market to fall quickly, should the negative sentiment increase momentum. Sliding prices towards the early 130.00 range might then be the case. The PMI index will be published on Wednesday, 23 April at 15:30 CET.