US stocks have opened in the red again today, the sixth straight day of losses which has not been seen on the Nasdaq since this time last year. The selloff in US tech stocks is dragging the broader indices lower as there is increasing concern that rising borrowing costs will derail the historic surge in the prices of fast-growing companies. Is this the beginning of a long overdue correction? Let’s all not forget the tech-laden index is still up 40% over the past twelve months.

That said, there are some notable decliners including Apple (-6%) and Tesla (-12%) which have fallen through or are just touching their 100-day moving averages and well-watched support.

With rising inflation concerns sparking a sell-off in the bond markets, the market is scratching its head trying to assess how much higher yields will dent the tech “darlings”, given that it reduces the present value of future profits.

USD firmer…for now

The dollar has found some support today amidst the risk-off tone. The neckline on the head and shoulders pattern on the DXY is proving worthy support at present around the key 90 level.  Blockbuster housing data and rising consumer confidence are no doubt helping the bid too.

Fed Chair Powell’s semi-annual testimony before Congress has also just been released where he echoes his recent remarks about the US economy remaining a long way from the Fed’s goals.

The FOMC remains fully committed to the current policy stance of supporting the economy and this has helped stock retrace some of their losses.

UK’s Highway out of Hell

Cable is closing in on 1.41 with continued optimism over the UK’s economic outperformance. PM Johnson’s reopening roadmap announced yesterday has June 21 imprinted on every UK residents mind (and perhaps May 17 too when pubs are set to open!) It was all dates rather than the promised data, but with current vaccinations rolling out faster than expected, perhaps the cautious nature of the route back to normality may be questioned in the coming months.

The EUR/GBP “vaccine trade” continues to march on, with eight consecutive days of losses matching the March/April 2020 streak. Key support lies at 0.86 and with the RSI approaching 20, a pullback should be expected. That said, sterling does like overextending!

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