The dollar is trading more mixed now in European morning trade, with yields sitting lower and equities posting a decent recovery off earlier lows. Of note, US futures have pared some of the heavier losses with S&P 500 futures now down just 0.2%.

Tech shares are still leading the downside, with Nasdaq futures down 0.5%. But that at least is less painful than the losses to start the session. The drag in tech comes from Intel’s softer guidance for Q1 this year, despite Q4 results beating estimates.

If anything else, do keep a watchful eye on the rates market as that could have implications for broader sentiment. And that includes a spillover impact on the equities space. The US PCE price report will be the main event later in the day and that should have some impact on rates, depending on the data.

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

The policy decision later should be a more straightforward one. There will be no changes in the key rates and the language and forward guidance will be similar to what we have gotten in December last month. There will not be any surprises on that front and that means the focus and attention will be on Lagarde’s press conference instead. So, what can we look forward to?

To keep things short, I only see two likelihoods in which there will be a notable reaction in markets.

The first would be Lagarde going on record to rule out rate cuts for March and April. As things stand, traders are not eyeing a move in March but are pricing in ~71% odds of a 25 bps cut in April.

Lagarde can point to a number of factors here such as developments in the Red Sea, wanting to wait on the outlook for wage pressures, and even just alluding to the fact that they’re not satisfied with the disinflation narrative just yet. On the final point, it will mostly come down to her tone.

What makes this an option and arguably the best outcome for the euro currency and for higher yields, is that Lagarde has to be rather explicit about it. Any ways in which she is viewed to be more timid would quickly withdraw the above playbook.

The second likelihood will be Lagarde deciding to be vague and leave open the door for a rate cut in March or April. I wouldn’t put it past her to do so but that will definitely knock the euro lower and give traders a reason to look to fully price in a move for April once again. Risk assets should also get a slight lift if Lagarde does decide to pursue this route.

All that being said, the most likely scenario is one that sees a rather dull reaction in markets. It is the case where Lagarde just mostly talks about being data-dependent and offers some light pushback to the current market pricing. She won’t explicitly rule out a rate cut as early as April but is likely to say that such a move could be fitting „by the summer“.

At the same time, she is to acknowledge better inflation developments in recent months but will argue that the job is not done and price pressures could be a bit more resistant for the time being.

That will maintain the status quo that we’re seeing and force traders to wait on the March meeting before taking stock of the ECB outlook again.

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

That’s a big drop in the headline reading as UK retail sales fall at its fastest pace in 3 years this January. Adding to the worrying picture is that the volume of sales for this time of the year is seen at -47, the lowest reading since May 2020. CBI notes that:

„Looking ahead, demand conditions will remain challenging as higher interest rates continue to feed through to mortgage payments and household incomes.“

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

Yesterday, the Dow Jones dropped following the big
beat in the US PMIs as the
rise in Treasury yields weighed on the market. The data was still in support of
the soft-landing narrative with the commentary in the PMI report citing fastest
output growth in seven months and sharp cooling in inflation. Given the
resilience of the labour market and consumer spending, the rate cuts continue
to be pushed back a little, but as long as the disinflationary trend remains
intact, we can expect the Fed to proceed with the “insurance” cuts anyway.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones yesterday
fell into the close with the price now standing right around the previous high
and the blue 8 moving average. This is
where we can expect the buyers to step in with a defined risk below the level
to position for a rally into another all-time high. The sellers, on the other
hand, will want to see the price breaking lower to target a bigger correction
into the 37066 level.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we
have a good support zone around the previous high as there’s also the confluence with
the 38.2% Fibonacci
retracement level and the moving averages. A break
below the support should give the sellers even more conviction for a drop into
the 37066 level.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
recent price action formed what looks like a double top with
the support zone around the previous high being the neckline. What happens
around this level will likely decide where the price will go in the next few
weeks. A bounce should lead to a rally while a breakout is likely to trigger a
selloff into the 37066 level.

Upcoming Events

Today we will see the Advance US Q4 GDP and the
latest US Jobless Claims figures. Tomorrow, we conclude the week with the US
PCE report.

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

• Digital pound would enhance user choice by complementing, not replacing cash transactions
• There would be further public consultation on a digital pound prior to introduction of any primary legislation by the government
• Upon completion of design phase around the middle of the decade, BOE and the government will decide on whether to proceed to create a digital pound
• Digital pound would only be introduced once both houses of parliament had passes the relevant legislation
• The legislation introduced would guarantee users‘ privacy
• Digital pound would be a claim on the BOE, unlike unbacked cryptocurrency assets

I wouldn’t expect them to rush or push too hard on this matter. As things stand, no major central bank is committing too keenly on this project. China was among the first big names to try and pioneer it but the take up has been rather underwhelming to say the least.

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

Is TSLA stock a but after its big earnings drop?

The recent earnings announcement from Tesla, last night on 24 Jan 2024, has resulted in a notable 7% to 8% decline in its stock price so far, sparking discussions among investors about potential buying opportunities. This situation has brought to light a unique investment strategy that introduces a staggering 12 to 1 reward-to-risk ratio, particularly appealing to long-term investors looking to capitalize on Tesla’s current market position.

A patience-rewarding tade strategy for TSLA stock
Itai Levitan at ForexLive.com suggests to consider, at your own risk, a strategic approach for investors eyeing Tesla’s stock. The identified trading range for Tesla, spanning from $100 to $400, has been consistent since August 2020. This range is characterized by significant trading activity and is anchored by two pivotal price levels: the value area high at $162.50 and the value area low at $142.78.

The strategy is based on patience and precision, recommending buy orders at key points. The initial buy order is set at $163.77, with subsequent buy orders at $157.73, $142.78, and $131.76. These points target the lower ends of the identified range, aiming for an advantageous entry into the market.

TSLA STOCK TECHNICAL ANALYSIS VIDEO, PRICE FORCAST AND LONG TERM TRADE PLAN WITH A 12 TO 1 REWAR VS RISK POTENTIAL

• Averaging out an attractive entry price for this Tesla stock trade plan
  If the market fills all these orders, the average entry price consolidates at $148.82. This average reflects the comprehensive cost per share across the entire investment, offering a balanced entry point.
• Always have a stop, in ths case sell your TSLA Long position close to 141
  To manage potential risks, a stop-loss order is advised at 5% below the average entry price, at $141.38 . This tactic is crucial for limiting losses in case of unexpected market downturns.

Unlocking high reward potential for this long-term TSLA trade plan
The strategy’s strength lies in its extremely high reward-to-risk ratio. Two profit-taking levels are identified: $197.13 and $238.00. The first level offers a 6 to 1 ratio, where traders would sell a third of third Long position, while the second a 12 to 1, fo selling another third of the position, an the third profit target at 18 to 1, thus averages the potential to an impressive 12 to 1.

Effective risk management and profit taking, a third at each profit target
It is recommended to liquidate one-third of the position at each profit-taking level. This method allows for securing gains while also mitigating the risk of market reversals.

This investment approach is tailored for those who are patient and willing to wait for the market to align with the identified price ranges. It’s a strategy more suited for long-term investors rather than those looking for immediate returns. Do return to ForexLive.com for future updates and various views.

This article was written by Itai Levitan at www.forexlive.com.

The central bank adds that while that is a tough scenario for the economy, an outright decoupling from China would be much worse for Germany in any instance.

According to its simulations, real German GDP would be 0.7% lower in the first year of any economic crisis in China and just under 1% lower in the second year. This owes much to Germany’s trade ties to China, which will see lower exports in general alongside weakening global demand.

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

• Prior -23

The UK manufacturing order book balance falls further to start the year, signaling persistent issues within the sector itself. That is further amplified by a drop in the new orders volume from +2 in October to -13 in January. But at least the quarterly survey shows business optimism rising to -3 from -15 previously.

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

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  with no dovish language as they reaffirmed that they will keep rates high for
  sufficiently long to return to the 2% target.
• The latest employment report showed job losses in December and
  lower than expected wage growth.
• The UK CPI beat expectations across the board, which is
  going to reinforce the BoE’s neutral stance.
• The UK PMIs improved for both the Manufacturing and
  Services measures although the former remains in contractionary territory.
• The latest UK Retail Sales missed expectations across the
  board by a big margin as consumer spending remains weak.
• The market expects the BoE to start
  cutting rates in Q2.

JPY

• The BoJ kept its monetary policy unchanged as expected with interest rates at
  -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
• Governor Ueda repeated once again that they won’t
  hesitate to take easing measures if needed but he’s becoming more optimistic on
  achieving their 2% target.
• The Japanese CPI eased further across all measures
  which makes it even harder to expect a rate hike from the BoJ anytime soon.
• The latest Unemployment Rate remained unchanged near cycle lows.
• The Japanese PMIs improved for both the Manufacturing
  and Services measures although the former remains in contractionary territory.
• The latest Japanese wage data missed expectations by a big margin
  and as a reminder the BoJ is focusing on wage growth to decide whether to tweak
  its monetary policy.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY broke
through the key resistance around
the 184.30 level and rallied all the way back to the cycle high at 188.68 where
it stalled. This is where the sellers are likely to step in with a defined risk
above the high to position for a drop back to the 184.30 level. The buyers, on
the other hand, will want to see the price breaking higher to increase the
bullish bets into new highs.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair has
been trading inside a rising channel with the price recently pulling back and
bouncing from the lower bound of the channel where we had also the 38.2% Fibonacci retracement level
for confluence. This is
where the buyers stepped in with a defined risk below the Fibonacci level to
position for a break above the cycle high. The sellers, on the other hand, will
want to see the price breaking below the Fibonacci level to increase the
bearish bets into the 184.30 support.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the setup around the cycle high with the key support around the 187.50
level highlighted by the green box. If the price breaks above the cycle high,
the buyers might increase the bullish bets. The support zone will be the last
line of defence for the buyers as a break below it should see the sellers
piling in more aggressively and increasing the bearish momentum.

Upcoming Events

Today the main event will be the US PMIs. Tomorrow,
we have the Advance US Q4 GDP and the latest US Jobless Claims figures.
Finally, on Friday we conclude the week with the Tokyo CPI and the US PCE
report.

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

The dollar is failing to find much comfort amid lower yields and more positive risk sentiment on the session thus far. While both factors are not stretching out too much for now, the greenback is still finding itself offered against the rest of the major currencies. EUR/USD is now up 0.5% to 1.0905 as it runs into large option expiries at the 1.0900 mark amid a bounce off its 200-day moving average (blue line) once again:

Meanwhile, the pound is one of the main beneficiaries against the dollar after a stronger UK PMI here. GBP/USD is now up 0.6% to 1.2765 as it starts to angle towards key resistance near the 1.2800 mark as highlighted here.

USD/JPY is also struggling as it gets pushed down by 0.7% to a low of 147.38 with sellers hoping to try and contest a break of the 100-day moving average (red line) at 147.51 on the day:

Elsewhere, AUD/USD is up 0.4% to 0.6605 as it contests the weekly pivot and also the 200-hour moving average at 0.6603 currently. The latter is a key near-term level to watch as a break above that will give buyers more impetus for a rebound moving forward.

NZD/USD is also seen up 0.6% to 0.6135 as it is also running up against its own 200-hour moving average at 0.6139 on the day. Both the antipodean currencies are having a similar technical setup in that respect against the dollar right now, as they hope to snap three straight weeks of losses against the greenback to start the year.

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