European markets closed lower for the sixth day in succession yesterday as US markets once again went on a veritable roller-coaster roundtrip, with the Dow losing 547 points at the beginning of the trading day, before closing 567 points higher by the close.

The S&P500 also went on a round trip to the lows and back, closing higher for the first time in four days, though it remained well shy of reversing Monday’s losses.

Yesterday’s recovery in US markets is likely to result in a decent rebound for stock markets in Europe this morning after yesterday’s weak session, however it remains too early for the moment to suggest that this might be the end to this particular bout of weakness, given that we still remain below the levels of where we closed Monday’s trading session.

While the global economy continues to point to a positive economic outlook, the volatility around the moves of the past few days is likely to introduce an element of uncertainty and caution over the next few days, at least until the price action starts to settle down and become a bit more stable.

US 10 year yields edged back up again towards 2.8%, after initially slipping back sharply to 2.65% as the early week rout prompted some safe haven flows into US treasuries.

For markets in Europe we’ve seen the DAX and CAC40 both close below their long term 200 day moving average in the past few days, for the first time since the third quarter of 2016, raising the prospect that we could well be in for a period of consolidation in the coming days.

On the data front we have the latest German industrial production numbers for December, which are expected to decline 0.7% after a decent performance in November. These could well beat expectations if yesterday’s German factory orders are any guide which showed a sharp jump in December.

We can also expect to hear from the New York Fed President William Dudley later today, in the wake of yesterday’s rather dovish comments from fellow FOMC member James Bullard. Mr Dudley will be retiring later this year but it will be interesting to hear his take on the latest wages numbers and whether he still thinks that the recent tax cuts along with last week’s economic data alter the calculus for further rate rises this year.

EURUSD – found support around the 1.2320 area yesterday, with a break potentially retargeting the 1.2160 area. Resistance remains back at the recent highs last week just above the 1.2500 area.

GBPUSD – the slid back yesterday, falling through the 1.3970 area before finding support at 1.3835, and recovering slightly. To stabilise we need to move back through the 1.3980 area to retarget the 1.4100 area. A move below 1.3830 retargets the 1.3660 area.

EURGBP – found resistance at the 0.8910 area yesterday which is the trend line resistance from the October peaks at 0.9050. A move through 0.8920 retargets the 0.8980 area. An inability to overcome the 0.8910 area runs the risk of a move back to the 0.8810 area.

USDJPY – found support at the 108.40 area yesterday but still has resistance at the 110.2 area in the short term. This looks likely to remain the trading range in the short term

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