AMERICAN STOCKS AND THE USD RISE AFTER POWELL REAPPOINTMENT

American equities and the US dollar rallied after the decision by Joe Biden to reappoint Jerome Powell as the Federal Reserve Chair. His deputy will be Lael Brainard, a Democrat. Investors were paying close attention to the decision because of regulations. In the past few years, Powell has worked to ease some of the regulations that were implemented during the last financial crisis. Lael Brainard was seen as more likely to bring more regulations to the financial sector. For example, she was expected to push banks to disclose more on their carbon financing.

Stocks also rose as signs emerged that corporate deal-making is continuing. On Monday, it was revealed that Apollo Global Management was holding talks to acquire Marks and Spencer, a leading UK retailer. The company owns about 50% of Ocado’s retail business. On the same day, Veritas Capital and Evergreen Coast Capital sold Athenahealth to Bain Capital and Hellman & Friedman for $17 billion. This was notable since the two firms bought the company for about $5.7 billion a few years ago. In another deal, Ericsson acquired Vonage for $6.2 billion.

The euro continued its downward trend after the Powell reappointment. It also declined after data showed that Eurozone’s consumer confidence declined sharply in November. It fell to -8.2 in November, the lowest level since the pandemic started. This trend will likely continue as the region goes through another wave of pandemics. Later today, the pair will react to the new German government formation and the latest flash manufacturing and services PMIs.

EURUSD

The EURUSD downward trend continued after relatively weak Eurozone consumer confidence data. It fell to a low of 1.1242, which was substantially lower than this year’s high of more than 1.2200. The pair has moved below the Ichimoku cloud and the short and long-term moving averages. The Relative Strength Index (RSI) has also moved below the oversold level. Therefore, the pair will likely keep falling as bears target the support at 1.1100.

GBPUSD

The GBPUSD pair has been forming a bearish flag pattern in the past few days. The pair managed to move below the lower side of this pattern on Monday. It is currently trading above the lowest level this year. Also, it has moved below the 25-day moving average while the MACD and the Relative Strength Index (RSI) have moved lower. The pair will likely keep falling in the coming days.

AUDUSD

The AUDUSD pair continued their bearish trend after Biden appointed Powell. It dropped to a low of 0.7227, which was the lowest level since October this year. The pair has moved between the descending channel shown in green. It has also moved below the 25-day and 50-day moving averages and the 61.8% Fibonacci retracement level. Therefore, the pair will likely keep dropping as bears target the key support at 0.7150.