US stocks will struggle for direction until the latest inflation report tilts markets' expectations as to how aggressive the Fed will tighten into what is still deemed as an overvalued stock market.

Wall Street saw early selling pressure for tech stocks as investors still digest a wrath of disappointing outlooks and surging borrowing costs. Technology stocks are no longer a one-way trade as investors cut losses and now focus on valuations, competition, and long-term outlooks.

Forex

Financial markets are going to test the ECB. ECB’s Lagarde eased back from her hawkish shift last week. Last week’s decision to not rule out a rate hike has investors rushing forward rate hike expectations. Monday, she told Parliament that there was no need to rush to premature conclusions. The euro softened after her comments.

Oil

Crude prices had been rebounding since December as a tight oil market has been met with improving demand, sluggish output growth, geopolitical concerns that pose a risk to output, and frigid weather that has led to supply disruptions.

Energy traders locked in some profits over optimism that the US and Iran might be able to salvage a nuclear deal. A quick revival of the Iran nuclear deal still seems unlikely, so any relief from additional barrels of crude from Iran should not be priced in.

The rally in crude was ready for a break as risk aversion sent equities lower. The oil market still remains heavily in deficit and whatever weakness happens to prices will likely be short-lived.

Gold

Gold prices rallied over geopolitical concerns, a late stock market slide, and uncertainty over how aggressive the Fed will be to raise interest rates. Wall Street seemed to be overly pricing in an aggressive Fed and gold traders think that could be good news for bullion. Gold has been able to stabilize above the $1800 level even as Treasury yields appeared to be knocking on the 2.00% level.

As equity traders become more nervous over how stocks will perform over the first few Fed rate hikes, gold should start to see some safe-haven flows.

Bitcoin

Bitcoin believers have come back. Frothy calls were returning, and many investors were confidently returning back to crypto. The fundamentals have not changed at all, but the bullish buying has been steady. Momentum buying appeared to be returning for cryptos and Bitcoin was leading the charge. Many crypto traders have been looking for a strong altcoin season shortly once Bitcoin can stabilize above the $50,000 level.

Ethereum, Cardano, Terra, and Solana were all up over 5% on the day, yesterday, as well. The true test for cryptos will be if they can maintain a rally if risk aversion hits all markets. Monday's session on Wall Street was mixed.

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