European stocks retain a solid positive tone ahead of a widely anticipated decision by the Federal Reserve later today. The US central bank is expected to raise rates for the first time in four years to combat the elevated inflation that hit a 40-year high last month. Investors also keep monitoring developments on the geopolitical front. According to the latest reports, Putin confirmed that they don’t want to occupy Ukraine.
Earlier in the day, Russian foreign minister Sergey Lavrov noted that peace talks with Ukraine aren't easy, but there is hope for compromise. Those remarks were enough to keep equity markets elevated. US stocks added to yesterday’s gains in early trading on Wednesday, with tech-related stocks leading gains following a spectacular recovery in Chinese markets during the Asian session.
The powerful bounce in stocks shows how sensitive the equity markets are these days, with investors staying alert as Russia-Ukraine negotiations continue. Elsewhere, the greenback stays on the defensive ahead of the Fed’s decision. The US dollar Index has been struggling since the start of the week, extending losses to the 98.45 zone earlier today. Further direction will depend on the outcome of the Fed meeting.
The buck could regain the bullish impetus if the central bank strikes a more hawkish tone when commenting on the outlook for future interest rate hikes. Should the FOMC disappoint the USD bulls, the index may derail the 98.00 figure in a knee-jerk reaction to the event. Meanwhile, the bitcoin price extends the rebound along with traditional equity markets.
The BTC/USD pair briefly rallied to nearly one-week highs around $41,700 before retreating partially towards $41,000. In the process, the digital currency regained the 20-DMA, adding to a more upbeat technical picture. However, the coin is yet to confirm a break above the $40,000 figure on a daily closing basis as the overall tone in the market remains unstable.
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