<p style=““ class=“text-align-justify“>The euro was dented yesterday after a report came out suggesting that there might just be <a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecb-sources-50-bps-at-the-next-meeting-and-then-25-bps-afterwards-20230117/“ target=“_blank“ rel=“follow“>one more 50 bps rate hike on the cards</a> left for the ECB. But it is recovering well now with the dollar feeling the heat in European trading, as we see EUR/USD rise up to 1.0860 levels at the moment:</p><p style=““ class=“text-align-justify“>The push higher closes in on the highs at the start of the week as the bullish breakout in <a target=“_blank“ href=“https://www.forexlive.com/terms/e/eur-usd/“ class=“terms__main-term“ id=“a68cd323-8af1-4ecb-a8dd-0aa83e90da63″ target=“_blank“>EUR/USD</a> continues to stay intact. The softer dollar today is but another contributing factor to the technical momentum as of late, which is better depicted through the weekly chart below.</p><p style=““ class=“text-align-justify“>As seen above, there is scope for the upside push to extend towards the 50.0 Fib retracement level of the downswing from 2021 through to September last year, sitting at around 1.0942. That will be a key point to watch before added resistance comes into play at 1.1000 next.</p><p style=““ class=“text-align-justify“>The euro sentiment today is also helped by Villeroy’s earlier <a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-villeroy-too-early-to-speculate-about-what-we-will-do-in-march-20230118/“ target=“_blank“ rel=“follow“>comments</a>, reaffirming that Lagarde’s earlier rate guidance still stands.</p>

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

<ul><li>Core CPI +5.2% vs +5.2% y/y prelim</li></ul><p style=““ class=“text-align-justify“>No change to the initial estimates but just keep in mind that while headline annual inflation did drop in the euro area, core inflation continues to pose a problem for the region. That’s indicative of price pressures seeping into the more prominent parts of the economy, not just in fuel and energy prices.</p>

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

<p>Perhaps most importantly for the technical analysis for the Nasdaq Composite, the market reacted positively to
the beat in the <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> data and the miss in Average
Hourly Earnings and the <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>. The <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> has not touched on monetary policy or recent set
of data and the <a target=“_blank“ href=“https://www.forexlive.com/news/us-december-cpi-65-yy-vs-65-expected-20230112/“>CPI</a> report came out as expected. </p><p>Overall, the market interpreted
the recent developments as good news with inflation moderating and the labour
market remaining strong. The “soft landing” narrative is again in the
front seat and it’s driving the stock market to new highs. </p><p>The China reopening may also be a
contributor as the market may expect global growth to hold on in the
short-term, but it may also reignite inflationary pressures and make the Fed’s
job harder. </p><p>For now, the market is looking
only to the good side of things, and it will probably need really bad data on
the growth side to change the sentiment.</p><p>Nasdaq Composite Technical Analysis</p><p>On the daily chart above, the
price has breached to the upside the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> zone in the 10900 price region.
The target for the bulls now would be the resistance in the 11500 price area. A
failure to sustain the bullish momentum and a fall below 10900 would give the
bears control again.</p><p>On the 1-hour chart above, we can
see that the price is indeed struggling sustaining the bullish momentum
as depicted by the <a target=“_blank“ href=“https://www.forexlive.com/Education/chart-patterns-guide-20220125/“ target=“_blank“ rel=“follow“>rising
wedge pattern</a> and the price <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“ target=“_blank“ rel=“follow“>divergence</a> with the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-relative-strength-index-rsi-20220426/“ target=“_blank“ rel=“follow“>RSI</a>. This is ominous for the bulls
as the price is breaking out of the wedge and may fall below the 10900 level. </p><p>Zooming in to the 15 minutes
chart above, we can see that the bulls would need to break the 11143 level
and keep charging to invalidate the wedge pattern and target the resistance
at 11500. </p><p>On the other hand, a break
below the 11027 level would give the bears more control and a further fall
below the 10900 <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a> level should signal the resumption
of the bearish trend.</p>

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

<p>Market picture</p><p>Bitcoin
continues its streak of small wins, recording its 13th consecutive day of gains
on Tuesday, adding for 15 days in the last 16 sessions this year. </p><p>The exchange
rate rewrote a two-month high at $21.55K. Local overbought conditions continue
to build, with help from the stock indices, where the Nasdaq100 managed to
close Tuesday’s trading higher.</p><p>Bloomberg
strategist Mike McGlone said that the bottom in the crypto market has already
been passed. He noted that the charts resembled the situation in 2018, although
the macroeconomic situation is quite different. </p><p>Back then,
the Fed had already started easing its policy, but now it is a long way off,
„so anything can happen“.</p><p>It is easy
to agree with this statement, but we still point out that growth is vulnerable
to sharp declines at this stage. From a long-term investor perspective, we
pointed out already in November that the crypto market has passed its low
point. </p><p>However, the
best time for speculative buying is yet to come, when there will be a FOMO
stage, like we last saw from December 2020 to April 2021. An even more
colourful rise was from April to December 2017. In both cases, an acceleration
and near-ubiquitous rise after surpassing previous historical highs.</p><p>News background</p><p>Digital
currencies, CBDCs and stablecoins are the natural evolution of money and
payments and will fundamentally change the global financial system, Bank of
America believes. CBDCs „may become the most significant technological
advance in the history of money“.</p><p>According to
a new analysis by mining company Luxor, Bitcoin is showing
„resilience“ amid the challenges it has faced in the past year.
Macroeconomic pressures, natural anomalies, and the high volatility of some
mining companies‘ shares (and, in some cases, their bankruptcy) have never been
able to prevent the network’s hash rate from rising significantly.</p><p>The European
Parliament has changed the timetable for the European Union’s Cryptocurrency
Regulation Act (MiCA). Its final consideration has been pushed back to April.
The 400-page document needs to be translated into 24 EU languages.</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.

<ul><li>Trade, domestic consumption in China will return to normal in 2023</li><li>China’s economy will see improvement and hit normal growth rate this year</li><li>Financial risks have appeared recently due to factors such as loose regulation</li><li>Working to stabilise property sector, reduce financial risks</li></ul><p style=““ class=“text-align-justify“>Some trivial remarks there and the narrative fits with the ongoing pledge by China to support the economy through the re-opening phase for now. In any case, Xi probably has some bigger issues to sort out as the one <a target=“_blank“ href=“https://www.forexlive.com/news/chinas-population-fell-last-year-the-first-time-since-1961-20230117/“ target=“_blank“ rel=“follow“>here</a>.</p>

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

<p style=““ class=“text-align-justify“>In Japanese circles, that’s a stark contrast to the assumed interest rate of 1.1% set when the government compiled a draft state budget for the coming fiscal year. That’s the same long-term rate used for the budgets in the last six years even if actual borrowing costs have fallen short of said figure. I mean, in the past, the coupon rate on 10-year JGBs were 0.20% before the latest change at the start of this year made it 0.50%.</p><p style=““ class=“text-align-justify“>Is this yet another hint by Japanese officials that a bigger change to policy is coming? The yen isn’t really reacting much to it though with USD/JPY up 0.3% at 128.90. Meanwhile, 10-year JGB yields are still holding above the 0.50% upper limit set out by the BOJ – the third straight session running – on the eve of tomorrow’s policy decision.</p>

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

<ul><li>Prior -61.4</li><li>Outlook 16.9 vs -15.0 expected</li><li>Prior -23.3</li></ul><p style=““ class=“text-align-justify“>The standout data in the report here is that the outlook for the German economy has improved drastically into positive territory – the first time since February last year. This comes after a less harsh winter (helping with the energy situation) and as inflation pressures are showing signs of abating in recent months, being cause for economic optimism.</p>

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

<ul><li>China re-opening expected to encourage oil demand this year</li><li>Expects Chinese appetite to raise oil demand by 0.5 mil bpd</li><li>Demand from China, India could compensate for drop from developed countries</li></ul><p style=““ class=“text-align-justify“>There are still mixed views on the oil market as of late but price has recovered well after the start of the year scare, with WTI crude now hovering back close to $80.</p>

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

<ul><li>Mild recessionary tendencies will predominate at the start of the year</li><li>Things should only start improving in the spring</li><li>Sees exports increasing by 1.0% in real terms this year, lagging global trade growth forecast of 1.5%</li></ul><p style=““ class=“text-align-justify“>The outlook for Europe can take comfort from lower energy prices to start the year at least, coming off the back of a less harsh winter. However, recession risks are still reverberating and we’ll have to see how things develop in the next few months to get an idea of how severe the downturn might be across the region.</p>

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

<p style=““ class=“text-align-justify“>The dollar was <a target=“_blank“ href=“https://www.forexlive.com/news/dollar-slightly-on-the-weaker-side-to-start-the-new-week-20230116/“ target=“_blank“ rel=“follow“>slightly softer initially</a> and then <a target=“_blank“ href=“https://www.forexlive.com/news/dollar-recovers-some-poise-on-the-day-20230116/“ target=“_blank“ rel=“follow“>was bid to start the session</a> but all the flurry is dying down now and markets are keeping more settled. On the balance of things, the greenback is little changed with USD/JPY being arguably the only notable mover with the pair up 0.3% to 128.20-30 levels currently but off its earlier high of 128.86:</p><p style=““ class=“text-align-justify“>Other dollar pairs have also retreated from their earlier range extremes and are keeping little changed mostly. EUR/USD is flattish around 1.0825, off its earlier low of 1.0801. GBP/USD is down 0.2% to 1.2200 but off its earlier low of 1.2170. Meanwhile, AUD/USD is down 0.1% to 0.6965 and also off its earlier low of 0.6940.</p><p style=““ class=“text-align-justify“>Elsewhere, European indices are also holding just a touch higher, with gains around 0.2% to 0.3% mostly. The US stock market may be closed today but S&P 500 futures are down 0.3% but also off earlier lows seen in early European morning trade. The technical picture is one to watch this week as highlighted earlier <a target=“_blank“ href=“https://www.forexlive.com/news/eurostoxx-futures-03-in-early-european-trading-20230116/“ target=“_blank“ rel=“follow“>here</a>.</p><p style=““ class=“text-align-justify“>To summarise, the dollar bid earlier has faded and broader markets are keeping little changed amid a lack of key drivers to start the new week.</p>

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