The ECB’s annual forum is officially underway in Sintra, Portugal, with the market pondering the likely winners and losers. Christine Lagarde and Jay Powell are no doubt doing a little horse trading as both urgently need to address spiraling inflation and neither in a position to afford higher rates.

The US can help mitigate inflation by ramping the USD higher. Europe, which faces a more complicated energy dilemma thanks to the war in Ukraine, is stuck between a rock and a hard place.  As the euro slides, the sharp spike in energy prices accelerates.

continued for members…

The complication that has all worried, of course, is a debt crisis that sinks the weaker members of the ECB. It has been in the works since long before Russia invaded Ukraine. But, the invasion has obviously accelerated the slide.The EURUSD has had little luck topping the SMA50 ever since. If the ECB announces a substantial rate hike, it might theoretically help out the euro – if EZ members weren’t in such dire straits.

DXY backtests from time to time, but generally keeps climbing.USDJPY’s ramp has helped prop up stocks to some extent, but the euro’s slide is the more honest representation of what’s happening behind the scenes. The most bearish equity chart this morning is the SPX itself, which is coming up on its SMA20 as well as a well-defined yellow channel’s midline. Note, however, that it is back above the -20% line – likely a goal for the 2Q.

Gold and silver are mostly flat this morning, still failing to hedge against inflation and likely to break down in the next two weeks…

…as is BTCUSD.With more attention being paid to Biden’s upcoming trip to Saudi Arabia, oil and gas prices continue to slump. It’s safe to say Biden isn’t courting criticism from his own party just and flying 7,000 miles just to give MBS a well-deserved tongue lashing. He’s going there to negotiate for more oil production, which will probably mean more weapons sales of the sort that he pledged to stop if elected.

We all know how these things work. A deal is tentatively put together, and the head honchos meet and shake hands in order to seal it. So, it reasonable that prices are sliding in advance of the meeting.

This gives the 10Y that much more reason to complete its backtest. Stay tuned…