U.S. equities enjoyed another rally on Friday to close the week on a positive note. The Dow Jones Industrial Average climbed 0.08% to close at 33978.08. The S&P 500 gained 0.25% to close at 4070.56. The tech-heavy Nasdaq Composite rose 0.95%  to close at 11621.71. On Friday, Fed’s favorite U.S. inflation gauge, the U.S. PCE price index figure was released coming in at 0.3%, in line with broad market expectations.

Signs of slowing inflationary pressure have once again convinced market participants to bet on a softer Fed FOMC move this week. Markets are now broadly pricing in a more than 80% chance of a 25 basis point interest rate hike at the upcoming FOMC interest rate decision.

The benchmark U.S. 10-year treasury yield edged higher throughout Friday and was last seen trading at 3.509%. The policy-sensitive 2-year treasury yield sits at 4.213%, as of writing.

Mainland China will resume trading after a week-long Lunar New Year break. Market participants around the globe are now looking at China to extend the January rally into February. Over this Lunar New Year break, consumer spending has outpaced the comparable period in 2019, providing a whiff of optimism for the week ahead.

Earnings season continues with Alphabet Inc headlining today’s earnings. Alphabet Inc. will report earnings after the market closes. Wallstreet analysts are predicting an EPS of 1.21.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, gained 0.1% throughout last Friday’s trading. The Dollar moved higher despite the U.S. PCE index showing inflation rising at the slowest rate since October 2021; furthermore, the Core PCE, which excludes the volatile food and energy prices, increased 0.3%, month over month, also in line with market expectations.

EURUSD retreated 0.21% throughout last Friday’s trading. The Euro fared worse against the Dollar as the Greenback gained attraction amid weaker consumer spending and softening price pressure.

GBPUSD lost 0.15% throughout last Friday’s trading. The cable could not hold on to gains from earlier last week and ended the week 0.07% lower as the Dollar regains traction.

XAUUSD lost 0.08% throughout last Friday’s trading. The yellow metal continued to lose ground after a 0.88% decline on the 26th. The haven asset now faces a critical support level at around the $1928 per ounce price region.

Technical Analysis

EURUSD (4-Hour Chart)

EUR/USD slid toward 1.086 on Friday. The US Dollar gathers support from the mostly upbeat US macro data released, which, in turn, exerts pressure on its rivals. On the other hand, expectations for a more hawkish European Central Bank (ECB) seem to provide some support to EUR/USD. The market focus is now shifting to the key central bank event risks next week. The Fed will announce its policy decision on Wednesday. This will be followed by the ECB Interest Rate Decision on Thursday, which will play a key role in determining the next traction for EUR/USD.

For the technical aspect, RSI indicator 46 figures as of writing, sliding to below the mid-line, signaling that the market is losing its upside traction. A downward correction could persist. As for the Bolling  Bands, the price is now moving below the moving average. The upward momentum seems weak as the moving average keeps horizontal in the near term. In conclusion, we think EUR/USD is in correction mode since the price is edging lower toward the support at 1.0861. Besides, both the RSI indicator and Bolling  Bands signal that the pair is under pressure. For the uptrend scenario, the pair is testing support at 1.0861. The bulls must defend this level first to retain control. For the downtrend scenario, if the price drop below the support at 1.0861, it may trigger some technical selling and drag the EUR/USD pair further toward the next support at 1.0710.

Resistance:  1.0918, 1.1032, 1.1131

Support: 1.0861, 1.0780, 1.0710

GBPUSD (4-Hour Chart)

The GBP/USD pair continues with its struggle to find acceptance above the 1.2400 mark and comes under some selling pressure on the last day of the week and is set to finish Friday with losses of at least 0.20% Though the inflation of the United States continues to wane but remains twice elevated of Fed’s target, the continue grows of this pair, close at 1.2406 at the end of Thursday then dropped toward 1.2370,  break the support at 1.2341. The US Federal Reserve (Fed) preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE) for December, climbed 4.4% YoY, lower than November’s 4.7%, cementing the Fed’s cause of lower the size of subsequent interest rate increases, throughout the remainder of the year. Headline inflation rose by 5% YoY, well above the Fed’s target of 2%.

For the technical aspect, RSI indicator 56  figures as of writing, above mid-line, but signaling no strong upward momentum. As for the Bollinger Bands, the price holds around the horizontal moving average, indicating that the pair is under consolidation. In conclusion, we think the market is in consolidation mode until there is a decisive breakthrough to trigger follow-through buying or selling. For the uptrend scenario, the price needs a firm break above resistance at 1.2426 to show bullish impetus. For the downtrend scenario, if the price drop below the support at 1.2341, it may trigger some technical selling and drag the GBP/USD pair further toward the next support at 1.2292.

Resistance: 1.2426, 1.2493, 1.2593

Support: 1.2341, 1.2292, 1.2188

XAUUSD (4-Hour Chart)

Gold price struggles to gain upside traction on Friday. The US Dollar gathers support from the mostly upbeat US macro data released, which, in turn, exerts pressure on the dollar-denominated gold. Meanwhile, The benchmark 10-year US Treasury bond yield rise to above 3.5% ahead of the weekend, not allowing Gold to gain traction. At the time of writing, the gold price is trading at 1929.51, trying to defend the 1930 area. As for the economic calendar, the market focus is shifting to the key central bank event risks next week. The Fed will announce its policy decision on Wednesday. This will be followed by the ECB Interest Rate Decision on Thursday, which will play a key role in determining the next traction for Gold price.

For the technical aspect, RSI indicator 49 figures as of writing, close to mid-line, signaling the uncertainty of direction and the lack of main traction as the RSI indicator keeps moving up and down around mid-line for a while. As for the Bollinger Bands, the price is now moving below the moving average. The traction seems weak as the moving average keeps horizontal in the near term. In conclusion, we think the market is in modest bearish mode since both indicators show the uncertainty of traction and the price keeps edging lower. For the downtrend scenario, if the price drop below the support at $1922, it may trigger some technical selling and drag the Gold price further toward the next support at $1898.

Resistance: 1947, 1957, 1963

Support: 1922, 1898, 1873

Economic Data

The US jobs data and rate statements from the Bank of England (BoE) and the European Central Bank (ECB) are currently the focus of attention for many market participants. These announcements have the potential to significantly impact global financial markets, as they provide insights into the health of the respective economies and monetary policy decisions. 

With traders, investors, and economists eagerly awaiting these updates, the release of these data points is sure to cause market volatility.

Here are the key events for the week ahead:

Canada Gross Domestic Product m/m (31 January)

Canada’s economy grew 0.1% in October 2022, surpassing the earlier estimate of no growth. This marks a slowdown from the previous month’s 0.2% growth.

Experts predict no change in Canada’s economy in December 2022, forecasting 0% growth from November.

US ADP Non-Farm Employment Change (1 February)

The US private sector added 235,000 jobs in December 2022, surpassing November’s figure of 182,000. However, January is predicted to see a decline with only an additional 131,000 new jobs.

US ISM Manufacturing PMI (1 February)

The US ISM Manufacturing PMI declined to 48.4 in December 2022, marking the second consecutive month of contraction. This shift in spending from goods to services caused the decline. 

For January, analysts predict a PMI of 48.

FOMC Meeting and Rate Decision (1 February)

During the final Federal Open Market Committee (FOMC) meeting in December 2022, the US Fed increased the fed funds rate by 50bps to 4.25%-4.5%. Analysts predict a similar increase of 50bps this month.

BoE Monetary Policy Report (2 February)

At its December 2022 meeting, the BoE raised interest rates by 50bps to 3.5% with a 6-3 vote. This decision was made to control inflation and counteract concerns of an impending recession. Analysts anticipate the BoE will make another 50bps increase in this meeting.

ECB Monetary Policy Statement (2 February)

The ECB plans to raise interest rates by 50bps in February and March, with additional increases to follow. Analysts predict another 50bps increase this month.

US Non-Farm Employment Change (3 February)

In December 2022, the US economy experienced job growth of 223,000, the lowest since December 2020. The unemployment rate decreased to 3.5%. 

For January, analysts anticipate job growth of 175,000 and a slightly higher unemployment rate of 3.6%.

US ISM Services PMI (3 February)

In December 2022, the US ISM Services PMI dropped from 56.5 in November to 49.6. Analysts expect the PMI to remain in the 49-50 range this month.

U.S. equities marched higher over the course of Thursday’s trading. The Dow Jones Industrial Average rose 0.61% to close at 33949.41. The S&P 500 climbed 1.1% to close at 4060.43. The tech-heavy Nasdaq Composite gained 1.76% to close at 11512.41. Market participants turned a blind eye to the mixed U.S. GDP report, which showed that, despite aggressive rate hikes from the Fed, the U.S. GDP expanded at a faster-than-estimated pace into the end of 2022. Consumer spending, accounting for 68% of GDP, increased 2.1%, down slightly from 2.3% in the previous period but still positive. Weekly jobless claims fell by 6000, down to 186000 for the lowest reading since April 2022.

U.S. Treasury yields ticked higher amid a strong rally across equity markets. The benchmark U.S. 10-year treasury yield edged above 3.5% and was last seen trading at 3.503%. The policy-sensitive 2-year treasury yield currently sits at 4.187%.

Intel failed to deliver on earnings for the fourth quarter of 2022; furthermore, the chip maker gave one of the gloomiest quarterly forecasts in its history. The company is predicting a surprise loss in the current period and a sales miss by billions of dollars. Intel Corp. reported an EPS of 0.1, missing Wall Street estimates by more than 50%. Q4 revenue came in at 14.04 Billion, 3.1% lower than general consensus. Intel shares traded nearly 10% lower in after-hours trading.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, advanced 0.17% over the course of yesterday’s trading. The Dollar was buoyed by surging demand for U.S. treasuries ahead of Friday’s U.S. PCE data release. Markets are now pricing in a 25 basis point increase by the Fed at the next FOMC meeting.

EURUSD lost 0.22% over the course of Thursday’s trading. The Euro fared worse against the Dollar as market participants bid up the Greenback. The strong U.S. job report also acted as a tailwind for the Dollar.

GBPUSD edged 0.07% higher over the course of yesterday’s trading. Cable continued to advance after a 0.51% gain on Wednesday. U.K. PMI, which was released on the 24^th, indicated a drop in prices.

XAUUSD dropped 0.88% over the course of Thursday’s trading. The Dollar denominated Gold fared worse against the Dollar as market participants demanded U.S. treasuries and bidding up the Greenback.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair declined lower on Thursday, remaining under pressure and declined below 1.0900 level after the release of the United States Gross Domestic Product (GDP) data. The pair is now trading at 1.0866, posting a 0.34% loss on a daily basis. EUR/USD stays in the negative territory amid renewed US Dollar strength, as the greenback is volatile on Thursday following US economic reports and ahead of next week’s FOMC meeting. The US GDP report showed that the US economy expanded at an annualized rate of 2.9% in the fourth quarter, which came in slightly better than the market expectation for an expansion of 2.6% and strengthened the US Dollar that hit fresh daily highs across the board. In the Eurozone, the inflationary pressures are softening in Eurozone as supply chain bottlenecks are easing. But European Central Bank policymakers are still not satisfied with the scale of the interest rate and are reiterating more interest rate hikes ahead.

For technical aspect, RSI indicator 46 figures as of writing, suggesting that the pair could witnessed heavy bearish momentum as the RSI is falling sharply below the mid-line. As for the Bollinger Bands, the price declined sharply and dropped below the moving average, therefore the downside traction should persist. In conclusion, we think market will be bearish as the pair is now testing the 1.0861 support level. On the downside, the intraday sellers should seek entry below the aforementioned support level.

Resistance:  1.0918, 1.1032, 1.1131

Support: 1.0861, 1.0780, 1.0710

GBPUSD (4-Hour Chart)

The GBP/USD pair declined lower on Thursday, coming under bearish pressure and refreshed its daily low around 1.2350 mark after the release of the release of US economic data. At the time of writing, the cable stays in negative territory with a 0.18% loss for the day. The strong US growth data bolstered the US Dollar during the US trading session and acted as a headwind for the GBP/USD pair. At the same time, Durable Good Orders for December rose 5.6% MoM and Initial Jobless Claims for the week ending January 21 fell to 186K. Therefore, the odds for a smaller interest rate hike by the Federal Reserve are soaring and investors will look for clues about the future path from next week’s FOMC meeting. For the British pound, the dismal retail sales reported in the United Kingdom weighed heavily on the nation’s currency, as the data slumped over the last month at the fastest rate since April 2022.

For technical aspect, RSI indicator 52 figures as of writing, suggesting the bearish bias for the pair as the RSI is retreating from positive levels. As for the Bollinger Bands, the price preserved its downside momentum and dropped towards the moving average, therefore a continuation of the downside trend can be expected. In conclusion, we think market will be bearish as long as the 1.2426 resistance line holds. On the downside, a clear break of the 1.2341 hurdle becomes necessary for the GBP/USD sellers.

Resistance: 1.2426, 1.2493, 1.2593

Support: 1.2341, 1.2292, 1.2188

XAUUSD (4-Hour Chart)

Following the release of the Gross Domestic Product (GDP) preliminary reading in the United States on Thursday, the pair XAU/USD dropped sharply and retreated from a nine-month high above $1949 mark amid upbeat US economic data. XAU/USD is trading at 1926.44 at the time of writing, losing 1.03% on a daily basis. The US Dollar Index (DXY) is staging a comeback after being battered throughout the week and exerted bearish pressure to the dollar-denominated gold. Meanwhile, the recent release of downbeat US Retail Sales and PMI data has revived concerns over the health of the US economy, boosting expectations of smaller rate hikes from the US Federal Reserve in the upcoming policy meetings. As for now, the focus will shift to the US Core PCE Price Index due on Friday, which will play a key role in influencing the Fed’s rate-hike path.

For technical aspect, RSI indicator 46 figures as of writing, suggesting that the downside is more favored as the RSI stays below the mid-line. As for the Bollinger Bands, the price witnessed fresh selling and retreated towards the lower band, therefore the downside trend should persist. In conclusion, we think market will be bearish as the pair is heading to test the $1,922 support level. On the downside, if sellers extend their control below the abovementioned key support, an downside move toward the $1,898 level cannot be ruled out.

Resistance: 1947, 1957, 1963

Support: 1922, 1898, 1873

Economic Data

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U.S. equities closed mostly mixed throughout Wednesday’s trading. The Dow Jones Industrial Average gained 0.03% to close at 33743.84. The S&P 500 lost 0.02% to close at 4016.22. The tech-heavy Nasdaq Composite lost 0.18% to close at 11313.36. U.S. equities experienced a sharp drop at the beginning of Wednesday’s trading as Microsoft issued weaker guidance than expected; however, equities were able to strongly bounce back as market participants assessed corporate earnings and recessionary fears.

The benchmark 10-year treasury yield retreated slightly and was last seen trading at 3.451%. The short-term 2-year treasury yield gained slightly and was last seen trading at 4.133%.

EV maker Tesla reported earnings after the bell. The tech giant reported a beat on both earnings and revenues. Tesla reported revenue of $24.32 billion for the quarter, beating estimates of $24.16 billion. Despite cutting retail prices on its cars worldwide, Tesla has found abundant cash flow from its services business and continued government subsidies.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, dropped 0.27% throughout yesterday’s trading. The Dollar remains subdues ahead of the GDP and initial jobless claims figures, both scheduled to be released before the bell on Thursday. Market participants will also be tuning in on the U.S. PCE price index, scheduled for release on the 27^th.

EURUSD continued to rise throughout Wednesday’s trading. The Euro advanced 0.27% against the Dollar. The Euro-Dollar pair has now entered its 6^th straight winning session and now faces an immediate psychological resistance level of 1.1.

GBPUSD gained 0.51% throughout yesterday’s trading. The British Pound recovered most of its losses from Monday and Tuesday after the Dollar failed to attract bidding.

XAUUSD advanced 0.47% throughout Wednesday’s trading. Market participants’ concerns over growth and recession have opened the floodgates to the recent rally of Gold. The short-term interest rate expectation has allowed the Dollar to weaken and Gold to climb.

Technical Analysis

EURUSD (4-Hour Chart)

EUR/USD edged lower on Wednesday as cautious market sentiment helps the US dollar index hold its ground. At the time of writing, EUR/USD stays marginally below 1.0900, trading at 1.0867.  The US dollar index holds around 102. The IFO index from Germany on Wednesday showed that business sentiment improved modestly in January but failed to help the pair. The IFO index rose to 90.2, up from 88.6 in December, aligning with the forecast of 90.2. For more price action, eye on the release of the United States Gross Domestic Product (GDP) data and the Initial Jobless Claims on Thursday, which will directly influence the financial market.

For the technical aspect, RSI indicator 51 figures as of writing. The RSI indicator maintains neutral in the near term, signaling that the market is lack main traction. As for the Bolling  Bands, the price holds above the upward-moving average. The upward momentum seems weak as the pair trades in a narrow range in the near term. In conclusion, we think EUR/USD is in consolidation mode based on the technical analysis. The price is lack main traction. Market participants now await a key event on Thursday, which will act as a price catalyst, pushing the financial market. For the uptrend scenario, the pair need a breakthrough above the current resistance at 1.0912 to confirm the further uptrend. For the downtrend scenario, if the price drop below the support at 1.0780, it may lose its upward momentum and head to test the next support at 1.0710.

Resistance:  1.0912, 1.1048, 1.1131

Support: 1.0780, 1.0710, 1.0582

GBPUSD (4-Hour Chart)

GBP/USD trades in a narrow range around 1.2300 on Wednesday. In the absence of major macroeconomic data releases, the cautious market sentiment helps the US dollar index hold its ground and keeps the financial market non-volatile for now. On the other hand,  the various stimulus and energy payments have led to a record deficit in the UK but failed to solve the British workers’ problem, which sends more negative signals for GBP/USD. Market participants await the release of the US Gross Domestic Product (GDP) for the fourth quarter (Q4) and the Initial Jobless Claims on Thursday which will let market participants better understand the current market and trigger more price action.

For the technical aspect, RSI indicator 47 figures as of writing, still holding around the neutral region, signaling no main traction. As for the Bolling  Bands, the price trades between the moving average and lower band, suggesting that the is a lack of direction in the near term. In conclusion, we think GBP/USD may continue on consolidation until further breakthrough. For the uptrend scenario, the pair is establishing itself above the current support at 1.2273. It must not drop below the current support for any following upward movement. For the downtrend scenario, if the price drop below the support at 1.2273, it may stage more downward correction.

Resistance: 1.2430, 1.2600

Support: 1.2273,  1.2161, 1.2021

XAUUSD (4-Hour Chart)

Gold prices fell despite the weak US Dollar and falling US Treasury bond yields. Technical moves or near-term profit-taking could be the main reason. In the meantime, the US economic calendar would be busy on Thursday, led by US Gross Domestic Product (GDP) for the fourth quarter (Q4), expected at 2.6%. Further, Durable Good Orders are expected at 2.5%, compared to -2.1% of the previous. Initial Jobless Claims for the last week would also be updated, expected 205K, compared to 190K previous.

For the technical aspect, RSI indicator 51 figures as of writing, moving marginally around mid-line, signaling the lack of price movement. For the Bollinger Bands, the price is moving up and down between the upper band and the lower band, suggesting that the pair is lack traction. In conclusion, we think the market is in consolidation mode ahead of US key event on Thursday. The market needs a decisive breakthrough to confirm the following trend as  Gold price is trading between a narrow range. For the uptrend scenario, the next resistance is at $1,952. If the price breakthrough the resistance, it may head to test the next resistance at $1,977. For the downtrend scenario, if the price drop below $1,920, it may change its current trend and head to test the pivotal round figure mark at $1,900.

Resistance: 1952, 1977

Support: 1920, 1900, 1873

Economic Data

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U.S. equities struggled to maintain their recent rally throughout Tuesday’s trading. The Dow Jones Industrial Average gained 0.31% to close at 33733.96. The S&P 500 slipped 0.07% to close at 4016.95. The tech-heavy Nasdaq Composite lost 0.27% to close at 11334.27. The recent bear market rally has been aided by better-than-expected earnings results and signs of cooling inflation.

After the bell of the 24^th, Microsoft Corp. released F2022 Q4 earnings. The software giant delivered better-than-expected earnings and shares rose 4% in late trading. Microsoft announced $2.32 earnings per share, while sales rose 2% over the quarter to $52.7 billion.  Microsoft’s Azure cloud computing proved resilience by gaining 38% in sales, beating estimates of a 37% growth. Recent developments of ChatGPT and OpenAI have injected excitement for the tech giant.

The benchmark U.S. 10-year treasury yield continued to drift lower and was last seen trading at around the 3.455% mark. The policy-sensitive short-term 2-year treasury yield currently sits at 4.148%.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, traded mostly sideways throughout Tuesday and lost 0.09% by the end of the day. The Dollar has been trading extremely range bound between the 101 to 103 level over the past week as market participants await crucial earnings results from major U.S. corporations.

EURUSD gained 0.13% throughout yesterday’s trading. The Euro continued to gain against the Dollar as the Dollar recedes around the 101 level. The EURUSD has notched its fifth consecutive winning session.

GBPUSD lost 0.32% throughout Tuesday’s trading. The British Pound traded lower against the Greenback as the U.K. PMI came in at 47, lower than the market consensus of 47.9. The lower British PMI sparked a weakening of the Sterling.

XAUUSD rose 0.31% throughout yesterday’s trading. The Dollar denominated Gold continues to gain as the Dollar weakens.

Technical Analysis

EURUSD (4-Hour Chart)

EUR/USD regains lost territory on the weak US dollar. Earlier, EUR/USD declined toward 1.0830 with the initial reaction to US PMI data. After the markets priced in the data, EUR/USD rebounded above 1.0870. The US Dollar struggles to maintain upside traction as Wall Street’s main indices recover from session lows.

For the technical aspect, RSI indicator 56 figures as of writing. The RSI indicator maintains neutral in the near term, signaling that the pair lose clear direction. As for the Bolling  Bands, the price is hovering around the moving average. Though the moving average is slightly upward, the upward momentum seems weak as the price edges lower. In conclusion, we think EUR/USD is in consolidation mode based on the technical analysis. The price is lack clear traction. A decisive breakthrough is needed to trigger the follow-through buy or sell interest. For the uptrend scenario, the pair is now trading slightly below the resistance at 1.0912. The price needs a breakthrough above the current resistance to meet the higher-high pattern of an uptrend. For the downtrend scenario, if the price drop below the support at 1.0780, it may lose its upward momentum and head to test the next support at 1.0710.

Resistance:  1.0912, 1.1048, 1.1131

Support: 1.0780, 1.0710, 1.0582

GBPUSD (4-Hour Chart)

GBP/USD fell on soft PMIs. Both the Services and Manufacturing PMIs came in below the 50 levels, indicating contraction. The Manufacturing PMI rose slightly to 46.7, up from 45.3 in November and above the forecast of 45.4 points. The Services PMI fell to 48.0, down from 49.9 in November and below the forecast of 49.6 points. On the other hand, the composite PMI fell to 47.8, down from 49.0 in November and below the forecast of 49.3 points. GBP/USD fell after PMIs released and kept going South in the early US session. After the US PMIs released, the US dollar went weak and therefore lifted GBP/USD. The pair regained some lost territory from the earlier trading session. At the time of writing, GBP/USD is trading at 1.2320.

For the technical aspect, RSI indicator 45 figures as of writing, sliding to a bearish region from the mid-line, suggesting that the downward correction could persist as the RSI indicator crossed below the mid-line. As for the Bolling  Bands, the price hovering around the lower band, signaling downside traction in the near term. In conclusion, we think GBP/USD may continue on correction based on the technical analysis. For the uptrend scenario, the pair has to establish itself above the current support at 1.2273 to regather upward strength. For the downtrend scenario, if the price drop below the support at 1.2273, it may trigger some follow-through selling and head to test the next support at 1.2161.

Resistance: 1.2430, 1.2600

Support: 1.2273,  1.2161, 1.2021

XAUUSD (4-Hour Chart)

Gold price touches a nine-month high on Tuesday amid renewed US Dollar selling. Bets for smaller FED rate hikes keep the US dollar index under pressure. The markets have been pricing in a modest 25 bps rate hike at the upcoming FOMC policy meeting next week. This resulted in a continued decline in the US Treasury bond yields and the US dollar index, which in turn benefit Gold bullish traders. On the other hand, recession fears also favor safe-haven Gold.

For the technical aspect, RSI indicator 63 figures as of writing, staying in a bullish region and rising from mid-line, suggesting that the uptrend should persist. For the Bollinger Bands, the price is moving up between the upper band and the upward average, which is a typical pattern for an uptrend. In conclusion, we think the market is in bullish mode as technical analysis shows bullish potential. For the uptrend scenario, the next resistance is at $1,952. If the price breakthrough the resistance, it may head to test the next resistance at $1,977. For the downtrend scenario, if the price drop below $1,920, it may change the current trend and head to test the pivotal round figure mark at $1,900.

Resistance: 1952, 1977

Support: 1920, 1900, 1873

Economic Data

The equity market rallied two consecutive days on Monday, as the most influential segment of the US stock is about to kick off earnings in a test of the S&P500’s 12% surge from its October low. Giants like Microsoft Corp. and Texas Instruments Inc. are set to report results that will help shape the fate of a sector that last year faced a reckoning amid higher rates.

The latest notable company to announce layoffs to lower expenses was Spotify Technology SA, which climbed on plans to slash about 6% of its employees. Interestingly enough, despite the positive reaction to the industry’s cost-saving measures, some note that could herald waning demand. It’s also worth noting that among all tech groups, chipmakers were by far the best performers Monday thanks to a call from Barclays Plc upgrading Advanced Micro Devices Inc. and Qualcomm Inc.

The benchmarks, the S&P500 surged 1.19% on Monday, with tech-heavy Nasdaq100 seeing its best two-day run since November. Ten out of eleven sectors of the S&P500 stayed in the positive territory, as Information Technology performed the best among all groups, rising 2.28% daily. It’s also worth noting that the Energy sector, the only sector that stayed in the negative territory, slid 0.2% on Monday. Apart from this, the Dow Jones Industrial Average rose 0.8% and the MSCI world index rallied with a 1% daily gain on Monday.

Main Pairs Movement

The US Dollar has little changed on Monday, as the low market liquidity was caused by the Chinese new year. The DXY index extended the downside tendency in the first half of Monday, falling to a level around 101.6 during the beginning of the UK trading hour. Then, the DYX index rebounded to a level around 102.2 level ahead of the US trading session and closed at 101.9 on Monday.

The GBPUSD slid with 0.15% losses daily, as the UK is falling behind its peers in the race to spur economic growth. Prime Minister Rishi Sunak must act now to boost investment, fix a lack of workers and avoid chaos over post-Brexit rules. Meanwhile, the EURUSD rose by 0.15% for the day, as ECB President Christien Lagarde largely repeated her hawkish stance.

The gold rallied with a 0.26% daily gain, as risk appetite and a weaker US dollar partially offset the impact of higher US yields and the sharp decline in Silver price on Monday. The XAUUSD managed to rebound from a daily low of $1911 marks to above $1930 marks during the American trading session.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair edged lower on Monday, losing its upside traction that was witnessed earlier in the day and retreated from the multi-month high above the 1.0900 mark amid the cautious market mood. The pair is now trading at 1.0849, posting a 0.05% loss daily. EUR/USD stays in the negative territory amid renewed US Dollar strength, as the benchmark 10-year US Treasury bond yield recovered above 3.5% and helped the greenback stays resilient against its rivals. On top of that, the Fed officials were also hawkish ahead of the two-week-long pre-FOMC blackout period. Federal Reserve Governor Christopher Waller said that he favours a 25 basis point rate hike at the upcoming meeting and continued policy tightening beyond that. In the Eurozone, the ECB Governing Council member Yannis Stournaras argued that the adjustment of interest rates needs to be more gradual considering the slowdown in the growth of the euro area economy. Therefore, the mixed comments from ECB officials seem to have caused the Euro to lose some strength.

For the technical aspect, RSI indicator 52 figures as of writing, suggesting that the pair could witness some downside movements as the RSI is falling towards the mid-line. As for the Bollinger Bands, the price witnessed fresh selling and dropped towards the moving average, therefore a continuation of the downside trend can be expected. In conclusion, we think the market will be bearish as long as the 1.0912 resistance level holds.

Resistance:  1.0912, 1.1048, 1.1131

Support: 1.0780, 1.0710, 1.0582

GBPUSD (4-Hour Chart)

Financial markets anticipate that the Bank of England will raise interest rates by 0.5 percentage points next month due to high underlying inflation and the unexpected resilience of the economy. In December, inflation dipped slightly to 10.5%, down from 10.7% in November. However, the growth rate of prices charged by service companies increased, which is considered a more accurate indicator of inflationary pressure. Meanwhile, recent data suggests that inflation is under control in the US, resulting in a decrease in the USD index and pushing the GBPUSD to a six-week high. To stay informed, we should keep an eye on the numbers of the UK PMI this Tuesday and the US PCE price index on Friday.

From a technical perspective, although GBPUSD reached a six-month high, the upward momentum did not last long. It fell back to 1.2488 when the relative strength index (RSI) entered the overbought zone. As of writing, it was hovering around 1.2375 in the Bollinger band and it seems no strong resistance below 1.26. Once it successfully breaks the previous high, we could expect to see a firm uptrend.

Resistance: 1.2488, 1.2600

Support: 1.2273,  1.2161, 1.2021

XAUUSD (4-Hour Chart)

During the Blackout Period, US equities open in the green, indicating that investors have a positive outlook. According to CME Fed watch, the market currently expects a 99% chance that the Fed will raise rates by 0.25 basis points, which will also reduce uncertainty in the market and boost risk appetite. Although the price of gold retreated from its nine-month high, it still has strong support at 1,920 and is steadily continuing its upward trajectory. Market participants are now paying attention to the Personal Consumption Expenditure Price Index (PCEPI) this Friday, which measures personal expenditure within a period and serves as an important inflationary signal. If the PCEPI shows that inflation is further cooling down, the expectation of an end to rate hikes will strengthen, which could be disadvantageous to the dollar and potentially drive the price of gold higher.

From a technical perspective, after reaching 1,937, gold failed to continue its upward movement and retreated to 1,911. However, it left a long underlying indication of strong support. It is currently hovering around 1,925. We expect it to move within the Bollinger band. If support at 1,920 holds firmly and the FOMC’s monetary policy aligns with expectations, we believe gold will continue to rise further.

Resistance: 1932, 1952, 1977

Support: 1920, 1900, 1873

Economic Data

Markets will focus on the US Gross Domestic Products (GDP) report and the Bank of Canada (BoC) interest rate decision this week.

Analysts have various predictions for the GDP reading in the US for Q4 of 2022 after the economy grew an annualised 3.2% in Q3.

Meanwhile, the Bank of Canada (BoC) raised its interest rates by 50bps to 4.25% at its last meeting in 2022. Will BoC continue to raise interest rates? 

Here are the market events to keep an eye on this week:

EU, UK and US Flash Services PMI (24 January)

Flash Services PMI readings for December 2022 in the EU and the UK were 49.8 and 49.9 respectively, higher than in November. Meanwhile, Flash Services PMI in the US was 44.7 in December, much lower than its previous month’s reading.

Analysts expect Flash Services PMI in the EU, UK and US will rise slightly in January.

Flash Manufacturing PMI (24 January)

The Flash Manufacturing PMI in the EU was 47.8 in December 2022, higher than in November. The reading for the UK came at 45.3 and the US at 46.2, lower than in November.

Analysts expect the EU and UK Flash Manufacturing PMI readings to be slightly higher this month. They also predict that the US reading will be lower.

New Zealand and Australia CPI (25 January)

The Consumer Price Index (CPI) rose by 1.8% in Australia in Q3 2022, while it increased by 2.2% in New Zealand.

Analysts expect that for Q4 2022, New Zealand’s CPI will decrease by 1.9% while Australia’s will decrease by 1.5%.

Bank of Canada Monetary Policy Statement (25 January)

The Bank of Canada’s target for its overnight rate was raised by 50bps to 4.25% at its last meeting in 2022. The bank also noted that it was continuing its policy of quantitative tightening and that economic growth remains strong, but it will slow through the end of this year and into early 2023.

Analysts expect BoC to raise its interest rates by 25bps to 4.5% at its next meeting.

US Quarterly Gross Domestic Products (Adv) (26 January)

In Q3 of 2022, the US economy grew an annualised 3.2%, better than the 2.9% in the second estimate and rebounding from two straight quarters of contraction.

Analysts have various predictions for Q4 and expect the GDP reading to decrease by 1.2% to 2.8%.

US Quarterly Core PCE Price Index (27 January)

The Core PCE price index for the US increased 4.7% quarter-on-quarter in Q3 of 2022, the same rate as in the previous quarter.

Analysts expect that core PCE prices will fall by 3.9% in Q4.

US stock erased some of the week’s losses on Friday, as a tech rally buoyed risk sentiment and comments by Federal Reserve officials dialled back fears of overly aggressive policy moves. The Fed Governor Christopher Waller said the policy looks pretty close to sufficiently restrictive, which led the equity market to a session high.

Moreover, Philadelphia Fed President Patrick Harker repeated his view for more incremental steps in a rate hike, while Kansas City Fed Chief Esther George said the economy could avoid a sharp downturn. Earnings have also been in focus. Of the 55 S&P500 companies that have reported results so far, two-thirds have beaten analysts’ estimates, compared with the 80% positive surprise seen over the past several quarters.

The benchmark, the S&P500 rose for the first time in four days, and the tech-heavy Nasdaq 100 pushed it into the green for the period. Google parent Alphabet Inc. gained after revealing a plan to cut 12,000 jobs, and Netflix Inc. surged after reporting stronger-than-expected subscriber numbers. All eleven sectors of the S&P500 stayed in the positive territory, and the communication service performed the best among all groups. The Dow Jones Industrial Average rose 0.9% for the day, and the MSCI world index rallied by 1.4% on Friday.

Main Pairs Movement

The US dollar extended its negative traction on Friday, as Fed policy makers’ dovish comments. The DXY index managed to rebound above 102.3 level during the European trading period but then dropped below 102.0 level after Fed Governor Christopher Waller said the policy looks pretty close to sufficiently restrictive.

The GBPUSD has little changed for the day, as a combination of depressed CPI data and the US Dollar’s lack of appeal. The pair dropped to the 1.2340 level in the first half of Friday and then managed to rebound above the 1.2390 level at the end of the day. Meanwhile, the EURUSD slid to around 1.0800 in the first half of the day, and end the day with a 0.21% gain on Friday.

The gold slid by 0.32% daily, as the bulls take a breather after a five-week uptrend, especially amid a lack of traders from China and the Federal Reserve’s silence period. The XAUUSD prints mild losses around the $1925 mark during the UK trading hour, and closed the week at $1926 with volatility.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair edged higher on Friday, retreating from a daily high above the 1.0850 mark but then rebounded slightly during the US trading session amid a positive market mood. The pair is now trading at 1.0835, posting a 0.04% gain daily. EUR/USD stays in the positive territory amid renewed US Dollar weakness, as the greenback retreated from a daily top around 102.50 level and provided some support to the EUR/USD pair. However, the hawkish Federal Reserve (Fed) officials might challenge the upside momentum of late. On the economic data front, the Producer Prices in Germany contracted 0.4% MoM in December and rose 21.6% over the last twelve months. In the Eurozone, European Central Bank (ECB) President Christine Lagarde spoke in a panel discussion, saying that ECB will stay the course with rate hikes and doesn’t target an exchange rate.

For the technical aspect, RSI indicator 52 figures as of writing, suggesting that the pair could witness some upside movements as the RSI is rising higher above the mid-line. As for the Bollinger Bands, the price regained upside traction and rebounded from the moving average, therefore some upside momentum can be expected. In conclusion, we think the market will be bullish as the pair might head to test the 1.0870 resistance level. On the downside, the intraday sellers should seek entry below the 1.0780 support level.

Resistance:  1.0870, 1.0921

Support: 1.0780, 1.0722, 1.0624

GBPUSD (4-Hour Chart)

The GBP/USD pair declined lower on Friday, refreshing its daily low below the 1.2340 mark but then recovered slightly after the release of disappointing UK Retail Sales data. At the time of writing, the cable stays in negative territory with a 0.08% loss for the day. The UK Retail Sales fall 1.0% MoM in December, while Retail Sales and Industrial Production reports both showed larger-than-expected declines for December, which is a big miss compared to the market’s expectations of a 0.5% increase. Therefore, the dismal United Kingdom macroeconomic data undermines demand for the GBP/USD pair despite the US Dollar’s lack of appeal. For the British pound, Bank of England (BoE) Governor Andrew Bailey noted on Thursday that they think there will be a recession while also stating that the recession will be shallow by historic standards.

For the technical aspect, RSI indicator 62 figures as of writing, suggesting that the upside traction could remain in the near-term technical outlook as the RSI is moving northward above the mid-line. As for the Bollinger Bands, the price regained upside traction and climbed towards the upper band, therefore a continuation of the upside traction can be expected. In conclusion, we think the market will be bullish as the pair is testing the 1.2395 resistance level. On the upside, a break above the abovementioned key resistance could open the door for additional gains and favour the bulls.

Resistance: 1.2395, 1.2426, 1.2489

Support: 1.2334, 1.2271, 1.2168

XAUUSD (4-Hour Chart)

After the US Dollar recovered some ground amid elevated US Treasury bond yields on Friday, the pair XAU/USD witnessed some selling and retreated from multi-month highs around the $1,936 area during the US trading session. XAU/USD is trading at 1923.77 at the time of writing, losing 0.43% daily. The US Dollar Index (DXY) consolidates the previous day’s losses, as Fed policymakers favour higher rates during their last public appearances before the 15-day silence period ahead of the February FOMC meeting. Fed speakers continued their hawkish rhetoric and said that rates need to be “slightly above” 5%. As for now, Investors are also resorting to repositioning heading into the Fed’s blackout period and China’s Lunar New Year holidays, which start next week.

For the technical aspect, RSI indicator 59 figures as of writing, suggesting the lack of short-term direction for the pair as the RSI remains flat near 60. As for the Bollinger Bands, the price witnessed some selling and retreated from the upper band, therefore some downside movements can be expected. In conclusion, we think the market will be slightly bearish as long as the $1,932 resistance line holds. On the upside, if buyers extend their control above the abovementioned key resistance, an upside move toward the $1,952 level cannot be ruled out.

Resistance: 1932, 1952, 1977

Support: 1898, 1873, 1832