<p style=““ class=“text-align-justify“>As US futures dip, that is helping the dollar find a bit of a lift in European trading as we see some light hints of risk aversion come into play.</p><p style=““ class=“text-align-justify“>USD/JPY has risen from a session low of 128.10 earlier to 128.75 currently as the greenback starts to show more poise across the board. Meanwhile, EUR/USD is down 0.3% to a low of 1.0810 currently. That said, both pairs are still in a good spot following yesterday’s action as noted earlier <a target=“_blank“ href=“https://www.forexlive.com/news/dollar-faces-added-pressure-after-yesterdays-cpi-data-20230113/“ target=“_blank“ rel=“follow“>here</a>.</p><p style=““ class=“text-align-justify“>Elsewhere, GBP/USD has fallen from 1.2240 earlier in the day to 1.2175 now with the antipodeans also weaker amid the softer risk mood. AUD/USD is down 0.3% to 0.6945 and NZD/USD down 0.5% to 0.6360. The former came close to testing the 0.7000 mark before pulling back currently.</p>

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

<p style=““ class=“text-align-justify“>It’s a mixed bag but US futures have dipped in the past half hour or so with S&P 500 futures now down by 15 points, or 0.4%, on the day.</p><p style=““ class=“text-align-justify“>There is a slight hint of risk aversion seeping through and that is helping the dollar gain some ground across the board as well. AUD/USD is down 0.4% to 0.6945 while GBP/USD has seen gains turn to losses from 1.2240 earlier to 1.2175 currently, at the lows for the day.</p><p style=““ class=“text-align-justify“>USD/JPY is still the only pair bucking the trend, down 0.4% to 128.70 but at least off its earlier low of 128.10.</p>

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

<p class=“MsoNormal“>The recent economic data gave the Russell 2000 and the market reason to break out of the Christmas holidays range and the bullish
sentiment looks to be strong. </p><p class=“MsoNormal“>The beat in <a target=“_blank“ href=“https://www.forexlive.com/news/us-december-non-farm-payrolls-223k-vs-200k-expected-20230106/“ target=“_blank“ rel=“follow“>NFP</a> numbers and the miss in AHE
(Average Hourly Earnings) made the market to expect a goldilocks scenario:
strong labour market without wage inflation. Moreover, the big miss in <a target=“_blank“ href=“https://www.forexlive.com/news/ism-december-us-services-496-vs-550-expected-20230106/“ target=“_blank“ rel=“follow“>ISM
Services PMI</a> made the market to expect the Fed to stop hiking
soon with an earlier than expected cutting cycle on the horizon.</p><p class=“MsoNormal“>Yesterday, the <a target=“_blank“ href=“https://www.forexlive.com/news/us-december-cpi-65-yy-vs-65-expected-20230112/“ target=“_blank“ rel=“follow“>US
CPI</a> came out
as expected, and what caught the market’s attention was another beat in <a target=“_blank“ href=“https://www.forexlive.com/news/us-initial-jobless-claims-205k-versus-215k-estimate-20230112/“>Jobless
Claims</a> data, which showed a resilient and strong labour
market. This
should actually be bearish as it would keep the Fed on its track of hiking to
5% or more and then stay there for longer. </p><p class=“MsoNormal“>So, they may keep conditions
tight for too long causing an overtightening of financial conditions. But
the market is looking more at the goldilocks scenario at the moment, and we
need to wait for it to start worrying about the above-mentioned risks before
switching to a more bearish bias.</p><p class=“MsoNormal“>RUSSELL
2000 Technical Analysis</p><p class=“MsoNormal“>In the
daily chart above, we can see how the price, after breaking out of the
Christmas holidays range, started a strong bullish run to the upside
targeting the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> zone at 1920. </p><p class=“MsoNormal“>A break
above that zone may open the doors for a run to the resistance at 2030. A
failure at the 1920 zone and bearish fundamentals would make the price to fall
back to possibly the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> at 1650.</p><p class=“MsoNormal“>In the 1-hour chart above, we
can see the recent economic data and risk events that boosted the bullish
sentiment. The breakout started with the NFP and PMI data. The market then
leaned on the defensive side going into <a target=“_blank“ href=“https://www.forexlive.com/centralbank/powell-we-need-to-stick-to-our-mandate-20230110/“ target=“_blank“ rel=“follow“>Fed
Chair Powell</a> speech, but since he didn’t offer anything
bearish, the market resumed its rally. </p><p class=“MsoNormal“>Finally, the CPI data in line
with expectations and the beat in Jobless Claims gave the market another reason
to keep the bullish momentum intact. The <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> at 1920 looks like the natural
target for the current uptrend. </p><p class=“MsoNormal“>Zooming in to the 15 minutes
chart, we can see the near term levels of interest. If the price stays above
the 1873 level the market should maintain the bullish bias and target the
resistance at 1920. If the price breaks below the 1843 level, sellers should
regain control and target the range breakout level at 1800. Between the
green and red lines the price would be in no man’s land and it shouldn’t offer
any trading opportunities. </p>

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

<p style=““ class=“text-align-justify“>“The economic slowdown over the winter half-year will, according to the data we have now, be milder and shorter than expected“, says Habeck.</p><p style=““ class=“text-align-justify“>That’s an encouraging notion with the German stats office earlier also estimating that the economy only stagnated in Q4, despite views that a contraction would have been on the cards. That pushes back further slightly recession risks for Europe’s largest economy at least.</p>

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

<ul><li>Prior -2.0%; revised to -1.9%</li></ul><p style=““ class=“text-align-justify“>Euro area industrial output edged up slightly in November, helped by an improvement in intermediate goods (+0.8%), capital goods (+1.0%), and durable consumer goods (+0.4%). That if offset against a decline in energy production (-0.9%) and non-durable consumer goods (-1.3%).</p>

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