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

U.S. equities continued to retreat over the course of Thursday’s trading. The Dow Jones Industrial Average dropped 0.76% to close at 33044.56. The S&P 500 lost 0.76% to close at 3898.85. The tech-heavy Nasdaq Composite slipped 0.96% to close at 10852.27.

All three equity indices suffered losses as market sentiment, once again, turns risk off. The weaker-than-expected U.S. retail sales figure combined with missed earnings by major corporations have kept the recent risk rally contained.

Over the night, U.S. Federal Reserve Governor Lael Brainard, who is considered a dove, said the central bank would need to keep rates elevated for a longer period in order to bring inflation back to the bank’s target level. Governor Brainard’s comments continue to echo those of Chairman Powell and many other Federal Reserve officials.

The benchmark U.S. 10-year treasury yield climbed 0.62% over the course of Thursday and currently sits at 3.399%. The policy-sensitive 2-year treasury yield was last seen trading at 4.13%.

Netflix Inc., which released its F2022 Q4 earnings yesterday, saw a 3.23% drop in share prices after the company missed their earnings target. Q4 revenues came in at $7.85 billion with an EPS of 12 cents, compared to Wall Street estimates of 45 cents. Despite missing its earnings estimates, Netflix showed organic growth in global paid subscribers for Q4. On the other hand, the streaming giant also cited foreign exchange risk related to its euro-denominated debt that eroded some of its Q4 margins.

On the earnings calendar, State Street Corp. and Ally Financials will headline today’s releases.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, dropped 0.35% over the course of Thursday’s trading. The Dollar index has continued to trend lower despite hawkish remarks from Fed officials. The recent sell-off of the Greenback could continue before the FOMC meeting takes place in early February.

EURUSD climbed 0.34% over the course of Thursday’s trading. The Euro traded above the key level of 1.08 as the Greenback continue its retreat. ECB President Lagarde is scheduled to speak during today’s European trading session.

GBPUSD climbed 0.36% over the course of yesterday’s trading. The British Pound notches its third straight winning session against the Greenback amid the Dollar’s recent weakness.

XAUUSD soared 1.46% over the course of Thursday’s trading. The Dollar denominated Gold continues to find demand in the face of hawkish Fed comments. The risk-off sentiment across markets also buoyed the non-yielding metal.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair advanced higher on Thursday, failing to preserve its upside momentum and retreated slightly towards the 1.0800 mark amid improving market mood following the release of better-than-expected US economic data. The pair is now trading at 1.0806, posting a 0.11% gain on a daily basis. EUR/USD stays in the positive territory amid a weaker US Dollar across the board, as the positive economic news from the US lend support to investors’ sentiment and exerted bearish pressure to the safe-haven greenback. On the economic data front, the US Weekly Initial Jobless Claims decline to 190K in the week ending January 13, which came in better than the market expectation of 214K and also the lowest level in four months. In the Eurozone, the Accounts of the latest meeting from the ECB showed an initial attempt to hike rates by 75 bps and some participants advocated for a quicker reduction of the APP. The hawkish ECB also acted as a tailwind for the EUR/USD pair.

For the technical aspect, RSI indicator 48 figures as of writing, suggesting that the pair could witness some downside movements as the RSI is dropping below the mid-line. As for the Bollinger Bands, the price witnessed fresh selling and break below the moving average, therefore the downside momentum should persist. In conclusion, we think the market will be bearish as the pair is heading to test the 1.0780 support level. Technical indicators also drop toward negative levels, reflecting the bearish stance.

Resistance:  1.0870, 1.0921

Support: 1.0780, 1.0722, 1.0624

GBPUSD (4-Hour Chart)

The GBP/USD pair edged higher on Thursday, extending its modest daily gains and climbing to a daily high above the 1.2360 mark following the release of softer-than-expected US economic data. At the time of writing, the cable stays in positive territory with a 0.25% gain for the day. The Retail Sales and Industrial Production reports both showed larger-than-expected declines for December, which helped the risk appetite and weighed on the US Dollar. However, the rising fears of a potential recession should benefit the US Dollar’s relative safe-haven status and cap the upside for the GBP/USD pair. For the British pound, investors expect the UK central bank to continue raising interest rates to combat stubbornly high inflation, which was supported by the stronger wage growth data released on Tuesday. Meanwhile, the headline UK CPI is still at higher levels and might continue to act as a tailwind for the British Pound.

For the technical aspect, RSI indicator 67 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 long as the 1.2331 support line holds. On the upside, a break above the 1.2395 resistance level could open the door for additional gains and favour the bulls.

Resistance: 1.2395, 1.2426, 1.2493

Support: 1.2331, 1.2271, 1.2188

XAUUSD (4-Hour Chart)

With a weak US Dollar and a dampened market mood on Thursday, the pair XAU/USD snapped two days losing trend and ground higher towards the $1,920 area during the US trading session. XAU/USD is trading at 1921.89 at the time of writing, rising 0.90% on a daily basis. Despite the Initial Jobless Claims in the US declining by 15,000 last week, market sentiment remains dampened as the soft US economic data released on Wednesday sounded the alarms of an upcoming recession amidst a high inflation environment. On top of that, Boston Fed President Susan Collins said on Thursday that it was appropriate to slow the pace of rate increases, but she also emphasized its need to move above 5% and be held around at that level for some time. traders now are pricing in a 25 bps rate hike at the Federal Reserve’s January 31-February 1 meeting.

For the technical aspect, the RSI indicator is 60 figures as of writing, suggesting that the upside is more favoured as the RSI is rising higher towards 70. As for the Bollinger Bands, the price witnessed upside momentum and climbed higher to the upper band, therefore the upside trend should persist. In conclusion, we think the market will be bullish as the pair is heading to test the $1,924 resistance level. On the upside, if buyers extend their control above the abovementioned key resistance, an upside move toward the $1,935 level cannot be ruled out.

Resistance: 1924, 1935, 1952

Support: 1898, 1873, 1832

Economic Data

Dear Client,

Warmly reminds you that the component stocks in the stock index spot generate dividends. When dividends are distributed, VT Markets will make dividends and deductions for the clients who hold the trading products after the close of the day before the ex-dividend date.

Indices dividends will not be paid/charged as an inclusion along with the swap component. It will be executed separately through a balance statement directly to your trading account, the comment for which will be in the following format “Div & Product Name & Net Volume ”.

Please note the specific adjustments as follows:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected]

U.S. equities traded lower throughout Wednesday’s trading. The Dow Jones Industrial Average lost 1.81% to close at 33296.96. The S&P 500 dropped 1.56% to close at 3928.86. The tech-heavy Nasdaq Composite slipped 1.24% to close at 10957.01.

Equities markets were spooked by the weaker-than-expected U.S. retail sales figures, which came in at -1.1%. Weaker consumer spending sparked a drop in the U.S. Greenback and a retreat in the consumer discretionary sector.

Despite a strong start to the year, a tense earnings season and huge layoffs reported by Fortune 500 companies, the strong upward momentum for equities may vanish in a hurry. Recessionary fears have been largely overlooked by market participants for the first two weeks of 2023; however, with weak consumer spending and the Fed FOMC meeting, which is scheduled for February 1^st, around the corner, selling pressure has once again resurfaced.

The benchmark U.S. 10-year treasury yield dropped 5.09% and was last seen trading at 3.379%. The short-term 2-year treasury yield rose 10 basis points and sits at 4.086%, as of writing.

Netflix Inc., Procter & Gamble Co., and Preferred Bank will headline today’s earnings release. After delivering on earnings expectations, Morgan Stanley retreated over Wednesday’s trading as the 10-year yield faltered around the 3.3% mark.

The Bank of Japan will be releasing its trade data during today’s Asia trading session. The Bank of Japan surprised markets by keeping its loose monetary policy and keeping a tight grip on yield curves, thus sparking a downward spike in Japanese Yen. Still, the Japanese currency was able to gain back intra-day losses throughout Wednesday.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, saw large movements in both directions throughout Wednesday’s trading and ended 0.03% higher. The Dollar surged during the Asia trading session after the Bank of Japan surprised markets by keeping its tight control over yields; however, the Greenback dropped sharply after the weaker-than-expected retail sales and PPI figures were released.

EURUSD gained 0.06% throughout yesterday’s trading. The Euro Dollar pair climbed as high as 1.088 on Wednesday, but could not sustain that level as market participants demanded the Dollar as equities faltered.

GBPUSD gained 0.47% throughout Wednesday’s trading. The British Pound took full advantage of the Dollar’s weakness and was able to keep those gains towards market close.

XAUUSD dropped 0.22% throughout yesterday’s trading. The Dollar denominated Gold extends its losing streak into the third day as the Dollar gains traction around the 102 mark.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair advanced higher on Wednesday, regaining upside strength and rebounded sharply towards the 1.0880 mark following the release of weaker-than-expected US macro data. The pair is now trading at 1.0833, posting a 0.43% gain on a daily basis. EUR/USD stays in the positive territory amid aggressive intraday US Dollar selling, as the release of softer-than-expected US macro data dragged the greenback down to a seven-month low. On the economic data front, the Producer Price Index (PPI) for final demand in the US declined to 6.2% on a yearly basis in December, which was well below consensus estimates for a fall to 6.8%. The data further points to easing inflationary pressure and could allow the Fed to slow the pace of its policy tightening. In the Eurozone, the European Central Bank policymaker Francois Villeroy de Galhau said on Wednesday that it is “too early to speculate about what we will do in March.” But his words failed to impress market participants.

For the technical aspect, RSI indicator 54 figures as of writing, suggesting that the pair could witness some downside movements as the RSI is falling sharply lower. As for the Bollinger Bands, the price failed to preserve the upside traction and dropped towards the moving average, therefore the downside momentum should persist. In conclusion, we think the market will be bearish as long as the 1.0868 resistance level holds. Technical indicators also reflect bear signals as they retreat from their early peaks and head south.

Resistance:  1.0868, 1.0921

Support: 1.0780, 1.0722, 1.0624

GBPUSD (4-Hour Chart)

GBP/USD advances higher on Wednesday as UK inflation eased for a second straight month in December. Headline CPI (YoY) dropped to 10.5%, down from 10.7% in November and below the 10.6% of expectations. However, the core CPI (YoY) showed no improvement, remaining unchanged at 6.3%. Though there is a downtrend observed, inflation remains stubbornly high after hitting a 41-year high of 11.1% in October. It is much too high for the BoE, which is focused on curbing inflation. There is more work to be done. The next meeting of BoE will be on February 2nd, and the market has priced in a second-consecutive 50 basis point rate hike. The BoE will also release its latest economic forecasts, which could play a key role in the central bank’s rate policy.

For the technical aspect, RSI indicator 67 figures as of writing, soaring from mid-line, showing the upside traction in the near term.  As for the Bolling  Bands, the price rallied along with the upper band, signalling the strong bullish momentum. In conclusion, we think GBP/USD is in a bullish mode based on the technical analysis. For the uptrend scenario, the pair is now testing the resistance at 1.426. If the price breakthrough the level, it may head to test the next resistance at 1.2675. For the downtrend scenario, if the price drop below the support at 1.2168, it may change the current trend and head to test the next support at 1.2106.

Resistance: 1.2426, 1.2675

Support: 1.2168, 1.2106, 1.2013

XAUUSD (4-Hour Chart)

Gold price traded choppily on Wednesday. Earlier in the Asian trading session, gold price slumped to below the $1,900 mark at the lowest of $1,896.73. From the late EU trading session, the pair regather strength, recovering lost territory below $1,900 to the highest of $1,925.9. After the release of the December PPI, gold prices fell in a risk-averse mood.  At the time of writing, the gold price is trading at $1,908.54. US figures suggested the American economy could already be in a recession. The US Commerce Department reported that December Retail Sales plunged -1.1% MoM, below -0.8% of expectation, falling for two consecutive months. Furthermore, the Producer Price Index (PPI) slides to -0.5% MoM, below -0.1% of expectation. Easing inflation is seen as good news but also reflects decreased purchasing power.

For the technical aspect, the RSI indicator is 52 figures as of writing, holding around the mid-line, reflecting the unclear price trend in the near term. For the Bollinger Bands, the price hovers around the moving average. Since the moving average is upward, the trend is still in a modest bullish mode in the long -term. In conclusion, we think the market is in a modest bullish mode as technical analysis shows bullish potential. For the uptrend scenario, gold price got rejected from the current resistance at $1,924, and it needs a breakthrough above the level to meet the bullish pattern of a higher high. For the downtrend scenario, if the price drop below support at $1,893, it may trigger fresh selling traction and head to test the next support at $1,873.

Resistance: 1924, 1952, 1962

Support: 1893, 1873, 1832

Economic Data

U.S. equities were mixed over the course of yesterday’s trading. The Dow Jones Industrial Average lost 1.14% to close at 33910.85. The S&P 500 dropped 0.2% to close at 3990.97. The tech-heavy Nasdaq Composite gained 0.14% to close at 11095.11.

Equities were mixed heading into Thursday as market participants awaits monetary policy statement releases from the Bank of Japan, which shocked markets when it loosened its yield curve control during December of last year.

The benchmark U.S. 10-year treasury yield posted modest gains over the course of yesterday’s trading, and yields are currently sitting at 3.546%. The short-term 2-year treasury yield climbed 8 basis points and currently sits at 4.2%.

Goldman Sachs Group Inc. shares fell more than 6% after the financial services provider reported a drop in investment banking fees in the fourth quarter. Morgan Stanley, which also reported on Tuesday, delivered better earnings due to revenues from its assets and wealth management division. Morgan Stanley shares closed 5.91% higher over the course of Tuesday’s trading.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, traded mostly sideways over the course of Tuesday’s trading. The Greenback steadied after falling to its lowest point in more than 6 months. Recent inflation gauges have all signalled lowering price pressures, thus market participants have been rotating out of the Dollar and into equities.

EURUSD dropped 0.31% over the course of yesterday’s trading. The Euro has reached its short-term resistance level at around the 1.09 price region and is regressing back towards the 1.07 price region.

GBPUSD gained 0.78% over the course of yesterday’s trading. U.K. job reports indicated a strong labour market and rising wages, both making a case for more interest rate hikes by the BoE.

XAUUSD lost 0.38% over the course of yesterday’s trading. The Dollar denominated Gold weakened as the Dollar steadied around the 102 regions. The safe haven asset has enjoyed a smooth run to above the $1900 per ounce price level, but it remains to be seen whether the yellow metal can maintain its strong upward momentum.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair declined lower on Tuesday, losing its upside strength and dropping sharply towards the 1.0800 mark amid the souring market mood. The pair is now trading at 1.0806, posting a 0.15% loss on a daily basis. EUR/USD stays in the negative territory amid the recovery witnessed in the US Dollar, as the goodish intraday pickup in the US Treasury bond yields and a generally weaker tone around the equity markets keep providing support to the safe-haven buck. On the economic data front, investors did not react to mixed German data as the December Harmonized Index of Consumer Prices (HICP)  came at 8.6% YoY. The US Producer Price Index and monthly Retail Sales figures will be looked upon to determine the near-term trajectory for the EUR/USD pair. In the Eurozone, the comments from European Central Bank (ECB) chief economist Philip Lane have exerted bearish pressure to the Euro as he said that the central bank tightening will need to halt to get interest rates back to their target levels.

For the technical aspect, the RSI indicator is 50 figures as of writing, suggesting that the pair could witness some downside movements as the RSI is falling sharply lower. As for the Bollinger Bands, the price failed to preserve the upside traction and dropped towards the lower band, therefore the downside momentum should persist. In conclusion, we think the market will be bearish as the pair is heading to test the 1.0794 support level. Technical indicators also suggest that near-term selling is picking pace.

Resistance:  1.0868, 1.0921

Support: 1.0794, 1.0722, 1.0624

GBPUSD (4-Hour Chart)

GBP/USD advances higher on Tuesday following the UK jobs report. The UK Office for National Statistics (ONS) reported that Pay excluding bonuses rose by an annual 6.4% in the September-to-November period. In addition, the number of people claiming unemployment-related benefits fell to 19.7K in December from 30.5K previous and the jobless rate held steady at 3.7%, close to its lowest level in almost 50 years. Stronger wage growth and firmer employment might force the BoE to raise interest rates further and therefore lift GBP/USD. At the time of writing, the GBP/USD is trading at 1.2262. The next key event risk will be the UK consumer inflation figure on Wednesday. For more price action, eye on tier 1 economic figures.

For the technical aspect, RSI indicator 62 figures as of writing,  suggesting that the uptrend should persist as the RSI indicator is moving higher above the mid-line. As for the Bolling  Bands, the price advanced higher from the upward average, signalling the upside traction in neat-term. In conclusion, we think GBP/USD is in a bullish mode based on the technical analysis. For the uptrend scenario, the pair is now testing the resistance at 1.2271. The price needs a decisive breakthrough to trigger the follow-through buy interest. For the downtrend scenario, if the price drop below the support at 1.2168, it may change the current trend and head to test the next support at 1.2106.

Resistance: 1.2271, 1.2334, 1.2426

Support: 1.2168, 1.2106, 1.2013

XAUUSD (4-Hour Chart)

Gold price edges lower for the second consecutive day this week, moving further away from its highest level since last April. Gold price witnessed some selling pressure despite better-than-expected China’s Gross Domestic Product (GDP), Retail Sales and Industrial Production data in the reported period on Tuesday. At the time of writing, the gold price is trading at $1,906.43, slightly above the $1,900 round figure mark.

For the technical aspect, RSI indicator 54 figures as of writing, sliding all the way from the overbought region, suggesting that the uptrend momentum weakened and the price is staging a downside correction. For the Bollinger Bands, the price retreated from the upper band and is now holding around the upward average. Since the moving average keeps slightly upward, the pair maintains its bullish potential. In conclusion, we think the market is in a modest bullish mode as technical analysis shows bullish potential. That said, the price is lack enough strength to stage a continued advance currently. For the uptrend scenario, the gold price needs a breakthrough above the current resistance at $1,924 to meet the bullish pattern of higher highs. For the downtrend scenario, the price is trying to defend the $1,900 area. If the price drop below $1,900, it may trigger fresh selling traction and head to test the next support at $1,893.

Resistance: 1924, 1952, 1962

Support: 1893, 1873, 1832

Economic Data

U.S. equities traded higher on the first trading day of the week. The Dow Jones Industrial Average rose 0.33% to close at 34302.61. The S&P 500 gained 0.4% to close at 3999.09. The tech-heavy Nasdaq composite climbed 0.71% to close at 11079.16.

Numerous inflation-related reports, which all point to easing price pressures, have buoyed equity markets across the globe. The re-opening of China has also provided market participants confidence towards the overall global trade and supply chains. Recessionary concerns seemed to have been completely left behind in 2022 as equity has all started the year with positive gains.

The benchmark U.S. 10-year treasury yield edged higher over Monday and was last seen trading at 3.525%. The short-term 2-year treasury yield traded lower and sits at 4.24%, as of writing.

On the earnings calendar, Goldman Sachs and Morgan Stanley will report F2022 Q4 earnings before the start of the American trading session. United Airlines will report earnings after the American equity markets close. Earnings season will remain one of the largest threats to the recent equity markets rally. Q4 earnings should begin to reflect the effects of the Fed’s aggressive rate hikes in 2022.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, rose 0.12% throughout Monday’s trading. The Dollar index, which shed more than 7% over the last four months of 2022, has continued to lose an additional 1.15% since the beginning of 2023.

EURUSD lost 0.1% throughout Monday’s trading. Germany is scheduled to release its CPI figures and economic sentiment reports, both should affect volatility surrounding the Euro.

GBPUSD lost 0.3% throughout yesterday’s trading. The Dollar rebound on Monday worked against the British Pound. The U.K. will release claimant count change and hourly wage reports during today’s European trading session.

XAUUSD dropped 0.22% throughout Monday’s trading. The Dollar denominated gold lost ground as the Dollar rebounded across markets.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair declined lower on Monday, failing to preserve its upside traction and fell back towards the 1.0800 area amid a cautious market mood on the Martin Luther King holiday. The pair is now trading at 1.0827, posting a 0.04% loss daily. EUR/USD stays in the negative territory amid the recovery witnessed in the US Dollar, as the risk-off sentiment and thin market conditions help the greenback stage a comeback. The worries about a deeper global economic downturn have revived demand for safe-haven Dollars in the absence of any relevant economic data. Meanwhile, the release of the US Consumer Price Index (CPI) report for December has accelerated the odds of further decline in the policy tightening pace by the Fed. On the economic data front, investors will focus on the release of the US Producer Price Index (PPI) data on Wednesday. In the Eurozone, the European Central Bank (ECB) is looking to reach the terminal rate by the summer.

For the technical aspect, RSI indicator 56 figures as of writing, suggesting that the upside is more favoured as the RSI stays above the mid-line. As for the Bollinger Bands, the price regained upside traction and rebounded from the moving average, therefore some upside movements can be expected. In conclusion, we think the market will be bullish as the pair might head to re-test the 1.0868 resistance level. There should be limited selling interest as technical indicators have also turned flat within positive levels.

Resistance:  1.0868, 1.0921

Support: 1.0794, 1.0722, 1.0624

GBPUSD (4-Hour Chart)

The GBP/USD pair dropped lower on Monday, coming under modest selling pressure and retreated from a one-month high above the 1.2280 mark that touched earlier today amid a goodish US Dollar recovery. At the time of writing, the cable stays in negative territory with a 0.19% loss for the day. The latest US CPI report has lifted the bets that the Fed will soften its hawkish stance amid signs of easing inflationary pressures. Therefore, investors now have been pricing in a smaller 25 bps rate hike in February. For the British pound, the speculations that the Bank of England (BoE) could be nearing the end of its rate-hiking cycle and a bleak outlook for the UK economy have both exerted bearish pressure on the GBP/USD pair. The market focus now shifts to BoE Governor Andrew Bailey’s speech on Tuesday, which might influence the British Pound and provide some impetus.

For the technical aspect, RSI indicator 52 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 rebounded from the moving average, therefore some upside movements can be expected. In conclusion, we think the market will be slightly bullish as long as the 1.2168 support line holds. On the upside, a break above the 1.2271 resistance level could open the door for additional gains and favour the bulls.

Resistance: 1.2271, 1.2334, 1.2426

Support: 1.2168, 1.2106, 1.2013

XAUUSD (4-Hour Chart)

Despite Wall Street will remain closed in observance of Martin Luther King Jr. day, the pair XAU/USD witnessed some selling pressure and retreated from a nine-month peak around the $1,929 area during the European trading session. XAU/USD is trading at 1913.53 at the time of writing, losing 0.35% daily. A goodish intraday US Dollar recovery drives flow away from the US Dollar-denominated Gold, as the greenback stalled its recent downtrend and staged a solid recovery from a seven-month low. However, the growing expectations that the Fed will soften its hawkish stance could cap any meaningful upside for the US Dollar. Several Fed officials backed the case for smaller rate hikes and reaffirmed bets for a smaller 25 bps lift-off in February, which could act as a tailwind for the Gold price.

For the technical aspect, RSI indicator 64 figures as of writing, suggesting the pair’s lack of near-term directions as the RSI remains flat. For the Bollinger Bands, the price witnessed selling pressure and retreated from the upper band, therefore a continuation of the downside trend can be expected. In conclusion, we think the market will be slightly bearish as long as the 1,924 resistance line holds. A pullback below the 1,893 mark is more likely to attract fresh sellers and remain limited near the 1,893-1,873 region.

Resistance: 1924, 1952, 1962

Support: 1893, 1873, 1832

Economic Data

U.S. equities continued to climb on the last trading day of the week. All 3 major indices closed the week out in positive territory amid easing concerns over inflation. The Dow Jones Industrial Average rose 0.33% to close at 34302.61. The S&P 500 gained 0.4% to close at 3999.09. The tech-heavy Nasdaq Composite climbed 0.71% to close at 11079.16.

The December U.S. CPI report, which was released on the 12^th, showed the rate of consumer price increases rising at a slowing rate over the year; furthermore, consumer prices have dropped by 0.1% over the month. Easing price pressure sparked last week’s rally across equity markets; however, market participants should not completely disregard the Fed’s hawkish stance as, over the past month, Fed officials have continued to echo their intentions to increase terminal interest rate targets and keep interest rates higher for longer periods.

The benchmark U.S. 10-year treasury yield was last seen trading at 3.498%, while the short-term 2-year treasury yield dropped below 4.3% and is trading at 4.224%, as of writing.

On this week’s economic docket, the U.S. will release its retail sales and PPI figures on the 18^th and weekly jobless claims figures on the 19^th.

On the earnings calendar, Goldman Sachs and Morgan Stanley will report earnings on the 17^th.  Proctor and Gamble and Netflix will release earnings on the 19^th.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, lost 0.06% throughout last Friday’s trading. The Dollar index closed 1.67% lower over last week. Easing price pressure, signified by the soft CPI report released on the 12^th, has acted as a headwind for the Dollar.

EURUSD lost 0.19% throughout last Friday’s trading. The Euro could not advance against the Dollar as confidence in the European economy remains depressed.

GBPUSD gained 0.17% throughout last Friday’s trading. Cable posted a weekly gain of 1.17% as the Dollar continues to weaken. U.K. GDP came in at a positive 0.1% growth, month over month.

XAUUSD gained 1.24% throughout last Friday’s trading. The Dollar denominated Gold continues to find upside momentum as the Dollar falters.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair declined lower on Friday, failing to extend the previous upside momentum and dropped to a daily low below the 1.079 mark amid the speculations that the US Federal Reserve would slow the rate hikes pace. The pair is now trading at 1.0809, posting a 0.39% loss daily. EUR/USD stays in the negative territory amid the recovery witnessed in the US Dollar, as the greenback manages to regain some composure and advance to the 102.60 region on the back of the profit-talking sentiment in the risk complex. The financial markets are cheering for Thursday’s US inflation report, which showed December’s Consumer Price Index (CPI) dropping beneath 7% and core CPI below 6%. Moreover, according to the CME FedWatch Tool, odds for a 25 bps rate hike by the Federal Reserve lie at a 94.2% chance after the release of the US inflation report. In the Eurozone, the hawkish outlook remains as ECB policymaker Martins Kazaks said that there was no rationale for markets to bet on a rate cut and added that rates should rise well into the restrictive territory.

For the technical aspect, RSI indicator 61 figures as of writing, suggesting that the upside is more favoured as the RSI is now rising higher. As for the Bollinger Bands, the price regained upside traction and rebounded from the moving average, therefore some upside movements can be expected. In conclusion, we think the market will be bullish as the pair is heading to test the 1.0854 resistance level. The RSI also suggests that there is more room on the upside for the pair.

Resistance:  1.0854, 1.0921

Support: 1.0750, 1.0710, 1.0624

GBPUSD (4-Hour Chart)

GBP/USD had no clear traction on Friday as market participants has no consensus on direction. At the time of writing, the pair is still trading in a narrow range of around 1.22. In the UK, GDP for November outperformed, rising 0.1%, greater than the forecast of -0.2% but weaker than the previous of 0.5%. The overall situation is not that good, with GDP falling by -0.3% in the three months to November. The UK economy is sluggish and the Bank of England is facing difficulties as it must continue raising rates, despite the weak economy, to curb high inflation.

For the technical aspect, RSI indicator 56 figures as of writing, slightly above the mid-line, suggesting that the pair is in an uptrend but with no strong bullish momentum. As for the Bolling Bands, the price hovers around the average. The moving average holds almost horizontal, showing no clear trend in the near term. In conclusion, we think the price is waiting for a decisive breakthrough as technical analysis shows a neutral trend and the price hold in a narrow range. For the uptrend scenario, the pair is now testing the resistance at 1.2233. The price needs a decisive breakthrough to trigger the follow-through buy interest. For the downtrend scenario, if the price drop below the support at 1.2110, it may change the current trend and head to test the pivotal support at 1.1927.

Resistance: 1.2233, 1.2450

Support: 1.2110, 1.1927

XAUUSD (4-Hour Chart)

Gold price advanced above the $1,900 mark, hitting a new 9-month high at $1,921.95 on Friday as market participants speculated that the US Federal Reserve could shift to a less aggressive stance following the release of inflation data. According to the CME FedWatch Tool, there is a 94.2% chance that the FED will raise rates by 25 basis points after the release of US inflation data. At the time of writing, the gold price is trading at $1,915.64, continuing to extend gains on weekly basis.

For the technical aspect, RSI indicator 72 figures as of writing, holding above the overbought region, suggesting that the pair is in strong bullish momentum but facing the risk of a downward correction. As for the Bolling  Bands, the price goes up along with the upper bound, which is a sign of strong bullish momentum. The pair could make a downward correction in the short term before extending the rally. In conclusion, we think the gold price is in a bullish mode based on the technical analysis. That said, traders should aware of the risk of correction as the RSI indicator and Bolling Bands both signal overbought signs. For the downtrend scenario, the key support level is at $1,870. If the price drop below this level on the 4H chart, it may change the current trend and head to test the next pivotal support at $1,830.

Resistance: 1919, 1930

Support: 1870, 1830, 1775

Economic Data

The market will focus on US Producer Price Index (PPI) and Retail Sales data after last week’s US Consumer Price Index (CPI) came out as forecasted. 

Meanwhile, the Bank of Japan (BoJ) will be making its Monetary Policy Statement on 18 January. The BOJ is widely expected to keep interest rates in the negative territory.

Here are this week’s key events:

UK Claimant Count Change (17 January)

The UK saw a rise of 30,500 people claiming unemployment benefits in November 2022.

Analysts expect December’s data to be lower than November’s reading at 19,800.

Canada Consumer Price Index (17 January)

In November 2022, the CPI in Canada increased by 0.1% from the previous month. This was slower than the 0.7% increase in October.

December’s CPI reading is forecast to be higher by 0.3%.

US NY Empire State Manufacturing Index (17 January)

The New York Empire State Manufacturing Index declined 16 points from November to -11.2 in December 2022, its steepest drop since August and below market expectations of -1.

Analysts expect a sharp improvement in January but still a negative reading at -4.5.

Bank of Japan Monetary Policy Statement (18 January 2022)

The Bank of Japan shocked markets on December 20 when it widened the range around its 10-year yield target, allowing long-term rates to rise while keeping its interest rate steady at -0.1%.

BoJ is forecast to keep its interest rate in the negative territory.

UK Consumer Price Index (18 January)

The UK’s CPI increased 0.40% in November 2022 from October, the smallest increase since January of that year.

Analysts expect an increase of another 0.40% in December and could show a rise of 11.1% in the UK’s annual inflation reading.

US Retail Sales (18 January)

The US retail sales index fell 0.6% month-on-month in November of 2022, worse than market forecasts of a 0.1% fall.

Analysts expect December’s retail sales data to fall by 0.5%.

US Producer Price Index (18 January)

In November 2022, the US PPI for final demand increased by 0.3% month-on-month, matching October’s figures.

Analysts expect December’s reading to remain unchanged from November or decrease by 0.1%.