<p style=““ class=“text-align-justify“>Stocks are facing a rough time to start the new week and we are seeing S&P 500 futures fall lower by 43 points, down 1.1%, on the day currently. This is accompanied by a 1.4% drop in Nasdaq futures and a 0.8% drop in Dow futures as we continue to digest the market mood in European morning trade.</p><p style=““ class=“text-align-justify“>In the case of the S&P 500 index, the retreat in futures sets up yet another rejection at the 4,100 mark despite dip buyers looking for a more bullish breakout last week. The jump above the 200-day moving average (blue line) and key trendline resistance (white line) was extremely encouraging but there’s just this one last hurdle to clear.</p><p style=““ class=“text-align-justify“>As mentioned last week <a target=“_blank“ href=“https://www.forexlive.com/news/is-this-the-break-that-stocks-are-looking-for-20230124/“ target=“_blank“ rel=“follow“>here</a>, I’d be more convinced of a further upside break if the S&P 500 can clear 4,100 – so as to break the prevailing pattern of lower highs, lower lows. And it looks like we might not get there until after the major central bank decisions coming up later this week.</p>

This article was written by Justin Low at www.forexlive.com.

<p>Market picture</p><p>Bitcoin rose
5.3% last week to close at $23.8K. On Sunday, the first cryptocurrency was one
step away from $24K, updating its high since August. Ethereum gained 0.9% to
$1640. Top-10 leading altcoins have gained between 2.7% (Dogecoin) and 18.8%
(Polygon).</p><p>Total
cryptocurrency market capitalisation rose 4.4% to $1.08 trillion over the week,
according to CoinMarketCap. The cryptocurrency fear and greed index reached the
greed zone for the first time since late March last year.</p><p>Bitcoin is
gradually approaching its key moving averages. The 200-week is just above
$24.7K, and the 50-week is now at $24.5K. A break below these levels would be a
strong sell signal. A rebound above them could restore confidence in the crypto
market. But be prepared for a prolonged consolidation or correction before a
decisive move higher. </p><p>Polygon
(MATIC) broke into the top 10 by capitalisation, taking over Solana. Over the
past 30 days, the price of MATIC has increased by 52%. Ethereum’s second-tier
scaling network came second by daily users, behind the BNB chain.</p><p>Another
recalculation showed a 4.7% increase in the mining complexity of the first
cryptocurrency. The index renewed its all-time high at 39.35T.</p><p>News Background</p><p>According to
Matrixport, US institutional investors have started actively buying bitcoin,
accounting for up to 85% of all purchases. Altcoins are still largely lagging
but could soon overtake the top two cryptocurrencies. </p><p>According to
Reuters, the US Securities and Exchange Commission (SEC) has begun inspecting
Wall Street financial advisors for cryptocurrency custody services.</p><p>One of the
largest rating agencies, Moody’s, is developing a scoring system to analyse the
risks of stablecoins. The platform will be based on assessing the quality of
collateral reports and will support up to 20 assets.</p><p>This article was written by <a target=“_blank“ href=“https://www.fxpro.com/“ target=“_blank“ rel=“follow“>FxPro</a>’s Senior Market Analyst Alex
Kuptsikevich.</p>

This article was written by FxPro FXPro at www.forexlive.com.

<p style=““ class=“text-align-justify“>Despite equities posturing more defensively, there isn’t a clear hint of a theme among major currencies. The dollar is trading more mixed as it is slightly higher against the yen, loonie and aussie but a touch softer against the euro, franc and kiwi at the moment. It seems like traders are still sorting out their feet to start the new week with <a target=“_blank“ href=“https://www.forexlive.com/news/month-end-action-in-focus-20230130/“ target=“_blank“ rel=“follow“>month-end also in focus</a>.</p><p style=““ class=“text-align-justify“>USD/JPY was lower in Asia down to 129.20 but is now trading back up to around 130.00 although the predominantly downtrend is still very much intact (as seen below). Meanwhile, other dollar pairs are still respecting the technicals highlighted at the end of last week <a target=“_blank“ href=“https://www.forexlive.com/news/its-been-a-choppy-week-for-the-dollar-what-are-the-key-levels-to-watch-20230127/“ target=“_blank“ rel=“follow“>here</a> so there isn’t much else to comment on that.</p><p style=““ class=“text-align-justify“>It’s going to be a bit messy to figure things out in the next few sessions as markets will be bracing for the <a target=“_blank“ href=“https://www.forexlive.com/news/another-week-of-central-bank-bonanza-coming-up-20230130/“ target=“_blank“ rel=“follow“>central bank bonanza</a> coming up later this week, while having to deal with month-end rebalancing flows as well.</p><p style=““ class=“text-align-justify“>But as always, the technicals are arguably the best tool you can use to try and define risk and gauge the market bias during times like these. Otherwise, there might not be much else to work with to start the week as all eyes will be on the Fed, BOE and ECB in the coming days.</p>

This article was written by Justin Low at www.forexlive.com.

<p>UPCOMING
EVENTS:</p><p>Tuesday: US
ECI, US Consumer Confidence.</p><p>Wednesday:
ISM Manufacturing PMI, US JOLTs Job Openings, FOMC Policy Decision.</p><p>Thursday: BoE
Policy Decision, ECB Policy Decision, US Jobless Claims.</p><p>Friday: US
NFP, ISM Services PMI. </p><p>If the last
week was a pretty dull one with lack of big catalysts and a choppy price action,
this one is going to be the complete opposite. We will have the FOMC and other major
central bank policy decisions and lots of economic reports that the market is
particularly focused on.</p><p>The
„soft landing“ narrative is dominating the scene at the moment with
moderation in inflation and the resilience in the labour market. This has led
to an easing in financial conditions.</p><p>I think the
labour market data is more important now to the market given that the Fed has
complained many times about the “extremely tight” labour market. We’ve finally
been seeing disinflation in the past few months and the market has rallied on
that, but the labour market data has consistently beat expectations. </p><p>This is
something that should keep the Fed on its track to hike to their projected
terminal rate because from a risk management perspective they can’t risk
another spike in inflation given the tightness in the labour market, the easing
in financial conditions and the China reopening. </p><p>Tuesday: The
Employment Cost Index (ECI) is expected at 1.1% for Q4, down from the 1.2% of
Q3. Wage inflation is something the Fed and the markets are keeping an eye on
for the risk of a wage price spiral, but in the past months this risk subsided
as data showed a moderation in wage growth. </p><p>Since the
labour market is what in my opinion the market is more focused on now, I would
look at the US Consumer Confidence Present Situation Index, which correlates
with the unemployment rate, and generally foreshadows changes in employment by
a couple of months. </p><p>Wednesday: The ISM
Manufacturing PMI is expected to slip to 48.0 from the prior 48.4. The
employment and prices paid sub-indexes will also be important to watch, with
the former carrying more weight now for me. This is also why the US JOLTs Job
Openings should also be market moving in case of a notable fall in the data. </p><p>The FOMC is
expected to hike by 25 bps bringing the FFR to 4.50-4.75%. This move has been
well telegraphed in the past weeks by further moderation in inflation and Fed
members leaning on the smaller increase. In fact, the market is pricing a 98.4%
chance of the Fed raising rates by 25 bps. The Fed generally follows market
pricing, so it’s very unlikely to see them surprising with a 50 bps hike. I can
see them raising by 50 bps only if they wanted to break the current “animal
spirits” that made financial conditions to ease quite strongly in the recent
months. Such a move would certainly trigger a big risk off across the board. </p><p>I would also
add that the market is underestimating a lot the Fed’s resolve of hiking to
their projected terminal rate and stay there for a while. Their projections saw
a 5.1% terminal rate with 4.6% unemployment rate in 2023. This means that they
would be comfortable to not only hiking to their projected rate but also stay
there for longer as long as the unemployment rate stays below 4.6%. The current
unemployment rate is 3.5%. </p><p>Thursday: The BoE is
expected to hike by 50 bps bringing the Bank Rate to 4%. We will likely see
dissent again within the MPC with Tenreyro and Mann probably voting for
unchanged. The market expects further 25 bps hikes at the next meetings with
the terminal rate seen at 4.50%.</p><p>The ECB is
expected to hike by 50 bps bringing the deposit rate to 2.50%. The ECB members
and especially President Lagarde have been showing a more resolute and
aggressive stance on their tightening in recent months with calls of multiple
50 bps hikes. A recent report from Bloomberg though citing “ECB Sources” (which
are generally right) suggested that policymakers are beginning to consider a
step down to a 25 bps pace from March onwards. However, in recent speeches ECB
members leaned against such a report. The ECB is also expected to start QT in
March 2023.</p><p>The US
Jobless Claims is expected to show an increase to 200K from the prior 186K and
unchanged for the Continuing Claims at 1675K. Jobless Claims reports have been
consistently showing strength. A big miss should catch the market’s attention. </p><p>Friday: The NFP
report is expected to show 185K jobs added, down from the prior 223K. The rate
of jobs growth has been moderating month after months, but the labour market
remains extremely tight. The unemployment rate is seen at 3.6%, up from the
prior 3.5%. Average Hourly Earnings are seen moderating again with the Y/Y
reading expected at 4.3%, down from the prior 4.6% and the M/M figure to remain
unchanged at 0.3%. </p><p>The ISM
Services PMI is expected to return in expansionary territory at 50.3 after a
surprisingly big dive to 49.6 in the prior report. Another miss should be bad for
risk sentiment. </p><p>This article
was written by Giuseppe Dellamotta. </p>

This article was written by ForexLive at www.forexlive.com.

<p>In terms of technical analysis for the S&P500, the major trendline that defined
the 2022 bear market has been finally breached. The market keeps on charging
higher and higher on expectations that the Fed will end its tightening cycle
soon and inflation returns back to target without a significant damage to the
economy. </p><p>In fact, since November 2022,
inflation data have been showing a clear easing in inflation and the labour
market data kept on beating expectations. </p><p>The problem is that inflation and
employment are lagging indicators and the leading indicators have been pointing
to something pretty bleak on the horizon, which has been largely ignored by the
market. </p><p>It might be that until the labour
market data do not show a notable weakening, the bulls will have the upper hand. This week there are many
economic reports focused on the labour market, so it’s going to be a big one. </p><p>The other major risk is that the
Fed decides to surprise with a 50 bps hike, although this is very unlikely
since they follow market pricing, and they already telegraphed a 25 bps move.</p><p>S&P500 Technical Analysis</p><p>On the daily chart above, we can
see that the major blue <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“ target=“_blank“ rel=“follow“>trendline</a> that defined the 2022 bear
market has been breached. The bulls may now target the first <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> at 4175. </p><p>If they manage to extend higher,
then the resistance at 4324 will be targeted. If we see the bears smacking the
price back down below the blue trendline, that would be a possible major
fakeout signal and the start of another big sell off with the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> at 1506.</p><p>Looking at the 4 hour chart, we
can see that the minor upward blue trendline will define the current short-term
uptrend from the major downtrend. At the moment, the price is <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“ target=“_blank“ rel=“follow“>diverging</a> with the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/“ target=“_blank“ rel=“follow“>MACD</a>, which generally signals a
possible pullback or reversal. </p><p>If the labour market reports beat
expectations again and the Fed doesn’t deliver any surprises, the resistance at
4175 should be reached without issues. </p><p>Zooming in to the 1 hour chart, we can see that there are
two possible scenarios for the near-term price action: break above the 4108
resistance and the bulls should manage to reach the 4175 resistance, on the
other hand, break below the 4056 support and the bears should regain control
and target the minor blue trendline. </p>

This article was written by ForexLive at www.forexlive.com.