<p>The lesson of the year so far is that markets will do what people least expect. The strong consensus coming into the year was that rate and recession fears would keep stocks cheap before an H2 rally. Well, the market didn’t wait and now the S&P 500 is poised to close above some key levels, including the long-term downtrend.</p>

This article was written by Adam Button at www.forexlive.com.

<p style=““ class=“text-align-justify“>That comes after a choppy and mixed day yesterday but overall, we are still seeing some key levels in play. The dollar is mostly little changed at the moment with only the pound slightly softer and the yen higher on the day.</p><p style=““ class=“text-align-justify“>EUR/USD is flat at 1.0885 with buyers still hoping to keep the upside momentum in a push above 1.0900 towards 1.1000. But with the Fed fast approaching, we might just see some room for a pause in the move for now. Meanwhile, GBP/USD is keeping just below 1.2400 as buyers are consolidating after a failed push above the December highs of 1.2443-46 at the start of the week.</p><p style=““ class=“text-align-justify“>The commodity currencies are flattish today as well but AUD/USD is holding above 0.7100 as buyers knock on the door of the August highs at 0.7125-36 still. NZD/USD is keeping just below 0.6500 as the figure level continues to provide a key point of resistance for any upside move on the daily chart.</p><p style=““ class=“text-align-justify“>USD/JPY is the only decent mover today but even so, the pair is just down 0.3% to 129.80 with the downside trend still very much intact:</p><p style=““ class=“text-align-justify“>The risk mood is looking more cautious so far today, so let’s see how that progresses once Wall Street steps in and if US PCE data has the potential to provide traders with a trigger for more meaningful moves later in the day.</p>

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

<p>In terms of Russell 2000 technical analysis, the market is trading carefully
ahead of the FOMC meeting next week. The bulls had a good run recently ignoring
the deterioration in leading indicators like PMIs and focusing more on the
lagging ones like employment. </p><p>The labour market data keep on <a target=“_blank“ href=“https://www.forexlive.com/news/us-weekly-initial-jobless-claims-186k-vs-205k-expected-20230126/“ target=“_blank“ rel=“follow“>beating
expectations</a> with little sign of weakness. This, coupled
with <a target=“_blank“ href=“https://www.forexlive.com/news/us-december-cpi-65-yy-vs-65-expected-20230112/“ target=“_blank“ rel=“follow“>moderation
in inflation</a>, gave the market hopes for a “soft landing”
scenario where
inflation returns to its target without much damage in the economy and the Fed
can ease its monetary policy for a happily ever after ending. </p><p>That would be certainly an
unexpected and amazing outcome, but the signals from economic data are mixed
and the Fed is more likely to keep policy tight as long as the labour market
remains tight. Watch out for the next week events because not only we will
have the <a target=“_blank“ href=“https://www.forexlive.com/centralbank/wsj-fed-insider-says-its-open-market-committee-fomc-preparing-a-25bp-rate-hike-next-week-20230122/“ target=“_blank“ rel=“follow“>FOMC
Policy Decision</a>, but we will also get three major economic
reports: the two ISM PMIs and the NFP.</p><p>RUSSELL
2000 Technical Analysis</p><p>In the
daily chart above, we can see that the price is again at the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> at 1910-1920 zone. The market
hasn’t broken that resistance since September 2022, and it will need a good
catalyst for the bulls to manage a breakout and a rally to the next
resistance at 2030. </p><p>If the
market fails again and the sentiment turns sour, we may see the bears taking
control and possibly targeting the lows at 1630. The next week should be
decisive for the next move. </p><p>In the 1-hour chart above, we can
see how the <a target=“_blank“ href=“https://www.forexlive.com/news/us-december-retail-sales-11-vs-08-expected-20230118/“ target=“_blank“ rel=“follow“>big
miss in Retail Sales</a> data sent the market lower right from the
resistance before picking up again with a <a target=“_blank“ href=“https://www.forexlive.com/news/initial-us-jobless-claims-190k-versus-214k-estimate-20230119/“ target=“_blank“ rel=“follow“>beat
in Jobless Claims</a> data still showing a resilient labour market. </p><p>Russell 2000 Eyes Key US Data</p><p>Yesterday, although we got
another beat in economic data like <a target=“_blank“ href=“https://www.forexlive.com/news/us-q4-advance-gdp-29-vs-26-expected-20230126/“ target=“_blank“ rel=“follow“>Q4
GDP</a> and Jobless Claims, the market couldn’t break the
resistance. This may be a sign of cautiousness as the next week there are many
risk events like FOMC, ISM PMIs and NFP. It’s probably going to be choppy
heading into those events.</p><p>Zooming in to the 15 minutes
chart, we can see the near term price action with the market selling off right
at the stock market open and then recovering soon after. The 1903 level should
provide some support for the bulls, but the resistance zone at 1910-1920 has
been a tough one to crack. </p><p>If the 1903 <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> gets breached, the bears should
target the next support level at 1886 with a possible continuation to
1862 if the market turns fearful. </p>

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

<p style=““ class=“text-align-justify“>Here’s a snapshot of the major currencies space (which is not much different to what it was roughly three hours ago <a target=“_blank“ href=“https://www.forexlive.com/news/light-changes-among-major-currencies-to-start-the-session-20230126/“ target=“_blank“ rel=“follow“>here</a>):</p><p style=““ class=“text-align-justify“>There’s just a general lack of interest in markets for the time being, even with equities holding slightly firmer on the day. European indices are still maintaining slight gains while US futures are also a little higher currently. S&P 500 futures are up 0.2% while Nasdaq futures are up 0.6%, buoyed by Tesla’s record revenue and earnings beat.</p><p style=““ class=“text-align-justify“>But perhaps market players are waiting on key US data later, with other factors also in consideration:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/heads-up-watch-out-for-the-us-pce-data-tomorrow-20230126/“ target=“_blank“ rel=“follow“>Heads up: Watch out for the US PCE data tomorrow</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/month-end-rebalancing-should-see-the-us-dollar-underperform-morgan-stanley-20230126/“ target=“_blank“ rel=“follow“>Month-end rebalancing should see the US dollar underperform – Morgan Stanley</a></li></ul>

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

<ul><li>Prior 11</li></ul><p style=““ class=“text-align-justify“>UK retail sales volumes fall at its fastest pace since April with expected retail sales for February seen at -15 (vs -17 in January). That continues to underscore a weaker trend in consumption activity as the cost-of-living crisis intensifies across the country.</p>

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

<p style=““ class=“text-align-justify“>Morgan Stanley notes that their month-end rebalancing model expects the dollar to underperform this month, with their signal suggesting weakness in the greenback against all G10 currencies except the Norwegian Krone. That will add some weight to an already struggling dollar since the turn of the year.</p><p style=““ class=“text-align-justify“>Just something to take note of we approach the final few trading days of January.</p>

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

<ul><li>Inflation risks are becoming more pronounced</li><li style=““ class=“text-align-justify“>If significant risks materialise, BOJ must be ready to withdraw stimulus more strongly – such as raising short-term rates</li><li style=““ class=“text-align-justify“>Policy proposal calls for BOJ to allow bond yields to move more flexibly, following annual consultation with Japan</li><li style=““ class=“text-align-justify“>Possible options include widening yield band, raising yield target, targeting shorter-term yields</li></ul><p style=““ class=“text-align-justify“>The pressure is continuing to stay on the Japanese central bank here despite their policy decision last week. It seems like the chorus that is asking for change is getting louder and markets are also listening. 10-year JGB yields are back up to 0.49% today, just a whisker away from touching the <a target=“_blank“ href=“https://www.forexlive.com/terms/b/boj/“ class=“terms__main-term“ id=“c1f60108-4283-4827-911e-95f01607c737″ target=“_blank“>BOJ</a> ceiling of 0.50% again.</p>

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

<p>Market picture</p><p>Bitcoin
spent most of Wednesday in a shallow corrective mode, pulling back to $22.3K.
However, with the start of active trading in New York, optimism returned to the
equity markets, pushing BTC to $23.7K by the end of the regular session. We saw
renewed pressure and a pullback to the $23.0K level on Thursday morning.</p><p>Yesterday’s
decline can be seen as a technical correction from the momentum from January
19th, paving the way to $25.0K. However, it is more likely that the renewal of
the six-month highs was a false breakout, as trading has been predominantly in
the $22.7-23.3K range since Saturday, reflecting the continued profit-taking.</p><p>The
cryptocurrency’s market cap has returned to the $1.05 billion level, where it
has spent most of its time since January 21st.</p><p>News background</p><p>Twitter
analyst Trader_J called Bitcoin’s continued rise a manipulation. He speculates
that most of the BTC in the current rally has been bought using BUSD, Binance
stablecoin.</p><p>South Korean
authorities have issued an arrest warrant for the head of the country’s
second-largest cryptocurrency exchange, Bithumb, who is accused of manipulating
the share prices of the exchange’s subsidiaries and embezzlement.</p><p>According to
SEC Commissioner Hester Pearce, participants in the cryptocurrency community
and regulators should learn from the problems faced by the crypto industry in
2022. However, she noted that the challenges faced could be beneficial in the
future.</p><p>Attorney
John Deaton, who represents XRP owners, said a final hearing on the LBRY platform
would occur in New Hampshire on 30 January. The event, he said, is significant
for the industry: a final victory for the SEC would mean that all secondary
market transactions in digital assets could be deemed illegal in the US.</p><p>This article was written by <a target=“_blank“ href=“https://www.fxpro.com/“ rel=“follow“ target=“_blank“>FxPro</a>’s Senior Market Analyst Alex
Kuptsikevich.</p>

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

<ul><li>Prior was +27.9%</li><li>Mortgage rate 6.20% vs 6.23%</li></ul><p>Mortgage News Daily had US 30-year fixed mortgages falling as low as 6.04% last week but not yet below the 6% level, which could spur some activity. US home builder shares have done well since October, suggesting there’s some optimism out there about housing, despite all the negative commentary.</p>

This article was written by Adam Button at www.forexlive.com.

<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/bond-bears-quietly-plot-their-move-against-the-boj-again-20230125/“>Bond bears quietly plot their move against the BOJ again</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-futures-dribble-lower-as-risk-stays-on-the-defensive-20230125/“>US futures dribble lower as risk stays on the defensive</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/germany-january-ifo-business-climate-index-902-vs-902-expected-20230125/“>Germany January Ifo business climate index 90.2 vs 90.2 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/ifo-economist-german-economy-starting-the-year-with-cautious-optimism-20230125/“>Ifo economist: German economy starting the year with cautious optimism</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/switzerland-january-credit-suisse-investor-sentiment-400-vs-428-prior-20230125/“>Switzerland January Credit Suisse investor sentiment -40.0 vs -42.8 prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/japan-pm-kishida-will-make-decision-on-next-boj-governor-based-on-future-economic-trends-20230125/“>Japan PM Kishida: Will make decision on next BOJ governor based on future economic trends</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/japan-official-cites-kuroda-as-saying-boj-will-resolutely-stick-to-easy-policy-20230125/“>Japan official cites Kuroda as saying BOJ will resolutely stick to easy policy</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/japan-downgrades-overall-economic-assessment-for-the-first-time-in-11-months-20230125/“>Japan downgrades overall economic assessment for the first time in 11 months</a></li></ul><p>Markets:</p><ul><li>AUD leads, NZD lags on the day</li><li>European equities lower; S&P 500 futures down 0.7%</li><li>US 10-year yields down 2.7 bps to 3.439%</li><li>Gold down 0.7% to $1,923.81</li><li>WTI crude up 0.1% to $80.21</li><li>Bitcoin down 1.2% to $22,621</li></ul><p style=““ class=“text-align-justify“>It was a bit of a quiet session but there were some decent market moves, as risk sentiment turned from being cautious to being put on the defensive.</p><p style=““ class=“text-align-justify“>Microsoft warned about a slowing sales outlook and that weighed on tech stocks with Nasdaq futures holding lower by 0.6% at the end of Asia trading, before things turned worse in European morning trade. The mood in equities is perhaps also not helped by stronger CPI data in Australia and New Zealand as well.</p><p style=““ class=“text-align-justify“>S&P 500 futures are now down 0.7% with Nasdaq futures down 1.1%, as we also see European indices sit lower on the session.</p><p style=““ class=“text-align-justify“>In FX, the dollar benefited as a result with the euro and pound nudging slightly lower against the greenback and USD/JPY falling from 130.20 to 129.70 levels at the moment.</p><p style=““ class=“text-align-justify“>The aussie remains the lead gainer, after having pushed to 0.7120 against the dollar after the CPI data earlier in the day before falling back to 0.7080 levels currently – still up 0.5%.</p><p style=““ class=“text-align-justify“>Even though we also did saw a strong NZ CPI data, the kiwi is the laggard today with NZD/USD still facing a rejection of 0.6500 it seems. The pair is down 0.5% to 0.6470 currently, near the lows for the day as the sour risk mood isn’t helping.</p><p style=““ class=“text-align-justify“>All eyes are on the Bank of Canada decision up next now, and that could really be a big one – not just for the loonie, but for broader markets as well.</p>

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