US equities fell on Monday, however Asian markets managed to resist the bearish mood on Tuesday, closing on the green side. This is due to a slowdown in the flow of negative news from the geopolitics’ front and from central banks that are fighting inflation. Demand for risk recovered in European markets as well, European equity indices corrected up by about 1%, futures for US indices added more than 1%. The dollar index pulled back half a percentage point as demand for it as a safe-haven asset declined while supply rose as market participants cautiously turned to yield-seeking.

Looking at the technical chart of the S&P 500, it seems that it is primed for a rebound: the price found a bottom in approximately the same area from which it rebounded in June (3650 points). The price has drawn a “double bottom” pattern, so market participants may take seriously the fact that the 3650 area will act as an important support zone. The second signal that the initiative may move to buyers for some time was the rate of decline in recent days: RSI on the daily timeframe fell below 30 points, which is often a signal for reversal:

Another important signal that risk appetite has turned into a recovery, which is likely to continue for some time, was the rebound of the crypto market: Bitcoin rose by almost 8% and topped the $20,000 mark:

September proved to be an exceptional month for the dollar. The currencies of the G10 countries depreciated against the US currency from 1% (Swiss franc) to 7% (Pound sterling). Major currency volatility has risen to levels last seen in March 2020, with less swings observed in emerging market currencies, which is quite unusual. Apparently, this happened due to a disorderly Pound sell-off. Investors continue to assess the impact of the UK government's fiscal plans on the long-term viability of the country's public finances. The reaction of the Bank of England to the surge of volatility in debt and currency markets was “toothless”: the Central Bank did not give clear indications that it could soon raise the rate or intervene, so one should not hope that support in the GBPUSD will arise on its own.

The EURUSD in the last wave of the sell-off set a new low at 0.9550. The technical picture for the pair speaks in favor of an upward rebound: the price has reached the lower bound of the narrowing channel on the monthly timeframe, to break through it, even more negative news on the growth prospects of the Eurozone or a new round of escalation in the conflict with the Russian Federation will be required. As we discussed earlier, key risks have been factored in, so the temptation to bet on oversold is great. The potential target of the upward correction will probably be the round level of 1.00: