Forex Signals Brief for Oct 11: Stock Markets on the Slide

US stock markets have led the charge lower yesterday, with the major indices all wiping off more than 3% from their values.

The big sell-off comes on the back of investors starting to get nervous about future growth and appearing to want to take some risk off the table.

Recently we’ve seen the US raise interest rates in September as well as bond yields spiking higher. That has made many investors nervous about the higher costs dragging on equity values.

At the same time, prices are set to rise in the US, thanks to higher costs coming from the Chinese tariffs. Now that those tariffs appear here to stay and are not just a short-term political stunt, the true cost to the consumer needs to be factored in.

With that in mind, US investors will need to focus their attention on CPI data due out today. While it might be too early to see the impact from the tariffs just yet, rising inflation is likely to become a factor going forward.

We also have the ECB minutes due out today, but for the most part, there have been little new developments in recent times. For the time being all the focus is on US equity markets to see how they might respond to yesterday’s sell-off. If we gap down and drive lower on the open, there might be a chance of a decent reversal.

Forex Signal Update

The FX Leaders Team finished the day one and one, with the big moves coming in the indices. For the most part, the majors didn’t respond all that much to the selling pressure.

DAX – The DAX has cracked the big support level, thanks to the weakness coming out of Wall Street. If price can hold this level, there might be more ahead.

EUR/USD – Active Signal

The EUR/USD has been slowly grinding lower as we have seen a fair bit of interest in the USD recently. Of course, the rising US bond yields have helped the Greenback. But we are also seeing concerns out of Italy weight on the Euro.

Bitcoin – Active Signal

It looks like the sellers have returned to Bitcoin today. We had been holding above the $6,500 level, however, price has spiked lower and we nearly hit $6,000. Let’s watch what happens as Europe comes online.