Yesterday, the Dow Jones remained on the back foot
as the correction that began last week seems to have more room to go. As of
now, the data has been overall positive with the US ISM Manufacturing PMI beating
expectations and US Job Openings missing
forecasts. Moreover, yesterday we got a beat in the US ADP and US Jobless Claims data. If
the data remains positive, we can expect the market to bounce back once the
froth from the aggressive rate cuts expectations gets unwound. Today, is an
important day as we get the release of the US NFP and the US ISM Services PMI.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones remains
in a negative mood amid a general stock market selloff. The level to watch is
the support around
the 37066 level where we can find the confluence of the
recent swing low and the 21 moving average. This is
where we can expect the buyers to step in with a defined risk below the support
to position for new highs. A break below the support would open the door for a
bigger drop into the 36030 level.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
Dow Jones has been trading inside a rising channel but the price recently broke
out of it signalling a deeper correction to follow. We can also notice that the
latest leg higher diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. If the price breaks below the 37066 level the reversal would be
confirmed and the 36030 level will be the next target.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the current price action and the divergence with the MACD. Now it’s
just about waiting for the price to come into the 37066 support and see what
happens there as it’s likely to decide the direction for the next few weeks.

This article was written by FL Contributors at www.forexlive.com.

• Should not move towards confrontation because of differences
• Artificial decoupling is moving against the tide and losses outweigh gains
• The need for cooperation is not weakened, but stronger at this time
• No conflict between China and US is the most important peace dividend for the world
• Both sides should make use of foreign affairs, economy, finance to bolster relations

All this talk is mostly still just for show as both sides are not going to actually give in to make any real progress in strengthening ties. A lot of the relationship between the two countries is just for show. And while China has held strong leverage in the past, their recent economic struggles are not making it easy to portray such a strong front. Not only that, the outlook – especially on the demographics front in the next few decades – is one that could see China have to pick their battles wisely.

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

European indices are down roughly 1% now as stocks are struggling to stay afloat once again. The push lower comes as 10-year Treasury yields are at session highs, up 4.7 bps to 4.038% as bond sellers look to validate a break above the 4% mark on the week. US futures are also struggling, gradually moving lower on the day with S&P 500 futures now down 0.3%:

All of this continues to keep the dollar underpinned with commodity currencies struggling at the moment. AUD/USD is down 0.4% to 0.6680 with the weekly drop now nearing 2%. This will mark six straight days of losses for the pair as it falls to a three-week low at the moment.

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

• Prior +2.4%
• Core CPI +3.4% vs +3.5% y/y expected
• Prior +3.6%

Headline annual inflation may show a jump in price pressures but core annual inflation actually eased slightly further in December to 3.4%, down from 3.6% in November. As such, this still reaffirms the ECB’s case to remain in pause mode at least for the time being. However, if price pressures start to become stickier in and around the 3% mark, that may see policymakers struggle to sell any talk of an imminent pivot. So, we’ll see.

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

Yesterday, the S&P 500 remained on the back
foot as the correction that began last week seems to have more room to go. As
of now, the data has been overall positive with the US ISM Manufacturing PMI beating
expectations and US Job Openings missing
forecasts. Moreover, yesterday we got a beat in the US ADP and US Jobless Claims data. If
the data remains positive, we can expect the market to bounce back once the
froth from the aggressive rate cuts expectations gets unwound. Today, is an
important day as we get the release of the US NFP and the US ISM Services PMI.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
yesterday broke below a key support where we
had the confluence of the
recent swing low and the 21 moving average. This
has opened the door for an even bigger drop into the next support around the
4547 level. The sellers should have even more conviction now while the buyers
will need the price to rise back above the 4700 level to regain some control.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price has been trading inside a rising channel but the price eventually broke
not only below the lower bound of the channel but also below the key support
around the 4700 level where we had also the 38.2% Fibonacci
retracement level for confluence. We can also notice
that the latest leg higher diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we got a reversal signal and the target should be
right at the 4547 level.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the current price action with the recent break below the 4700 support.
The sellers should keep piling in around these levels with the lower high
around the 4726 level as the last line of defence. In fact, if the price breaks
above the 4726 level, the recent downtrend would be broken and the buyers
should regain control.

This article was written by FL Contributors at www.forexlive.com.