Yesterday, the Nasdaq Composite erased all the
losses from the Fed’s selloff as the market continues to trade the goldilocks
economy. In fact, the ISM Manufacturing PMI
surprised to the upside with the new orders index, which is regarded as a
leading indicator, jumping back into expansion. Moreover, after the close we
had some good earnings reports from the big names with META not only tripling
profits but even announcing its first-ever dividend. Today all eyes will be on the US NFP report
which is expected at 180K with estimates ranging from a low of 120K to a high
of 290K.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq Composite
yesterday bounced from the key support zone
around the 15150 level where we had the confluence of the trendline, the
38.2% Fibonacci retracement level
and the red 21 moving average. This is
where the buyers stepped in with a defined risk below the trendline to position
for a rally into new highs. The sellers, on the other hand, will want to see
the price reversing and breaking below the trendline to invalidate the bullish trend
and position for a drop into the 14477 level.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more clearly the bounce
from the support at the 15150 level. Given the strong gains after the close
from the major stocks, we can expect the index to open around the highs. The
buyers might want to pile in to join the bullish momentum and look for new
higher highs. The sellers, on the other hand, could fade the reaction to the
earnings and position short with a defined risk above the high looking for a
break below the trendline.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
had an important level around 15400 where there was also the confluence with
the red 21 moving average and the 50% Fibonacci retracement level. If we get a
pullback from the highs, the buyers will likely lean on the level as they will
have a better risk to reward setup to target new highs. The sellers, on the
other hand, will want to see the price breaking lower to increase the bearish
bets into new lows.

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

Key Highlights

· Since the
start of the year, crude oil has seen
a 6.50% increase, with a 0.80% gain observed in the past week.

· US oil
prices have witnessed a significant rally during January, reaching their
highest levels in nearly two months, driven by robust economic growth in the US
and the anticipation of Chinese economic stimulus.

· Geopolitical
tensions in the Middle East, particularly around the Red Sea, have further
supported prices due to concerns over potential supply disruptions.

Economic
Drivers

Global
Economic Outlook: The International Monetary Fund has raised its forecast for
global economic growth, positively impacting the outlook for both the U.S. and
China. This revision is based on a faster-than-expected easing of inflation.

IEA Predicts
Increased Oil Demand: The International Energy Agency forecasts a global oil
demand increase of 2 million barrels per day (mb/d) in 2024.

US Economic Indicators Boost Oil
Demand Outlook: Encouraging signs from the US economy, including
quicker-than-anticipated GDP growth in Q4 and diminishing inflation rates, have
enhanced expectations for oil demand.

Chinese
Economic Stimulus Lifts Market Sentiments: Economic initiatives by China to
stimulate growth have positively influenced market sentiments, indicating
possible boosts in oil demand from the leading global crude importer.

Geopolitical
Tensions: Escalating tensions in the Middle East, particularly relating to the
recent drone attack in Jordan and the US response, have heightened market
sensitivity and influenced oil prices.

Unexpected
Rise in US Crude Inventories: The latest EIA report showed a surprising
increase of 1.234 million barrels in US crude oil inventories for the week
ending January 26, 2024, defying market expectations for a 0.217-million-barrel
decrease.

Gasoline
Stocks Increase Less Than Expected: Gasoline inventories increased by 1.156
million barrels, which was below the anticipated gain of 1.483 million barrels.

Impact of
U.S. Interest Rate Outlook: The market is adjusting to the likelihood of
prolonged higher U.S. interest rates following the Federal Reserve’s dismissal
of expectations for a rate cut in March.

China’s
Economic Slowdown Concerns: Economic indicators from China, including
manufacturing activity remaining in contraction as per January’s official
purchasing managers index, raise alarms over demand prospects, contributing to
the cautious outlook on oil prices.

Technical
Overview and Key Levels

Shift in
Market Sentiment: Since October 2023, the oil market experienced a structured
downtrend, bottoming out at $68, before breaking out of its downward trend
channel in January. This breakout, particularly moving above $75 and the 45
daily EMA channel, shifted momentum towards a bullish sentiment.

Breakout and
Retest: Despite breaking the December high of $76 and momentarily surpassing
$79, the market has not been able to sustain its momentum and is now retesting
the $76 level as support, with potential for a new uptrend initiation if
support holds.

Resistance
at $80: The $80 resistance level is highlighted by the November highs and the
upper boundary of the 200 EMA channel, marking it as a critical resistance
level.

$80 Mark as
Trend Confirmation: A move above the $80 mark would confirm a new uptrend in
the US oil market. However, significant resistance near the November highs,
just below $80, challenges this potential shift.

Bearish
Momentum and Downward Trajectory: If the market cannot maintain levels above
$75, it would re-align to a downward trend, potentially accelerating bearish
momentum and leading to a sideways consolidation within January’s price range.

USOIL 4Hour
Chart:

Looking
Ahead

Market
Outlook Influenced by Key Factors: The upcoming week’s market direction is anticipated to be
shaped by developments in US-China economic policies, Middle East geopolitical
tensions, and changes in US crude inventory levels.

OPEC+
Meeting Outlook: While analysts do not anticipate a definitive decision on
April’s oil policy at today’s OPEC+ meeting, there is hope for insights into
future production plans.

Anticipation
for China’s Economic Stimulus: Investors are closely monitoring potential
additional stimulus measures from China, crucial for influencing the global
economic landscape and oil demand forecasts.

US Response
to Middle East Tensions: The potential impact on the oil market is closely
watched, as the US’s approach to ongoing Middle East tensions could
significantly influence global oil supply and prices.

Importance
of Middle East Developments: Continuous monitoring of Middle East tensions is critical,
as escalations could significantly impact global oil supply chains, potentially
driving oil prices upwards.

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

A slight rebound in Treasury yields, at least for now, is helping to keep USD/JPY up a little by 0.2% to 146.67. However, the dollar is looking sluggish elsewhere and trading near the lows for the day in European trading. EUR/USD is up 0.2% to 1.0893 after a bounce off 1.0800 and its 100-day moving average yesterday:

That sees buyers back in control, hoping for a stronger rebound after the stuttering start to the year. The euro side of the equation hasn’t been of much help but a steep decline in Treasury yields this week has been a key contributing factor to the rebound. We’ll have to see if the strong bids in the bond market will continue later on in the day.

Elsewhere, GBP/USD is also seen up 0.2% to 1.2765 while AUD/USD is up 0.5% to 0.6605 currently. Both pairs are stuck in a bit of a consolidative phase but may search for breakouts just before the weekend. The ceiling for GBP/USD is closer to 1.2800 while for AUD/USD, it is around 0.6615-25. Those will be key levels to be mindful of going into US trading later.

The main event coming up later will be the US jobs report. That will certainly be a key driver in the session ahead, alongside the potential continuation in the strong bids in Treasuries this week. Those are the two main factors that will impact dollar sentiment before the weekend comes along.

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

Key Highlights

Dollar Gains:
Significant monthly increase, influenced by strong U.S. data and Fed rate cut
speculations.

Eurozone’s
Economic Stance: Stagnant growth in Q4 and ECB’s tight monetary policy
amid rate cut expectations.

Technical
Analysis Insights: Bearish momentum for EUR/USD highlighted by key technical
indicators, with pivotal points at $1.07 support and $1.09 resistance levels.

Market
Snapshot

The dollar
is heading for its most substantial monthly increase since September, as the
EUR/USD has trended lower since the year’s start, falling 2% and currently just
above the $1.08 level.

The dollars
gain against major currencies this month is attributed to adjusted market
expectations regarding the pace of Federal Reserve rate cuts, influenced by
strong U.S. economic data and
central banker comments. Economic indicators, such as job numbers and consumer
spending, have highlighted the resilience of the U.S. economy, contributing to
the strengthening of the dollar.

Economic
Drivers

Euro Area
Growth Stagnates: The Euro Area avoided recession in Q4 with flat growth,
outperforming expectations of a -0.1% contraction after a -0.1% decline in Q3.

Germany
Avoids Technical Recession: Q3 GDP revisions allowed Germany to narrowly escape
a technical recession, with Q3 GDP adjusted to flat from -0.1%. Q4 GDP showed a
contraction of 0.3%, in line with forecasts.

European
Central Bank Policy Meeting: The ECB’s latest meeting emphasized continued
commitment to tightening monetary policy to address inflation concerns. This
stance is generally supportive of the euro but also raises questions about
economic growth sustainability in the face of higher borrowing costs.

ECB Rate Cut
Expectations: Market expectations suggest a 75% chance the European Central
Bank will start cutting rates at its April 11th meeting, potentially reducing
the Deposit Facility rate to 2.50% by year-end from the current 4%.

US Economic
Data: The US has released a series of economic reports indicating strong
economic performance, including job growth and retail sales. Such data supports
the case of higher for long interest rates by the Federal Reserve,
strengthening the dollar against the euro.

FED Rate Cut
Expectations: Traders await the Federal Reserve’s decision, hoping for signals
on when rate cuts may begin. Financial
markets see a 50/50 chance of a rate cut in March, with a cut fully priced
in for the May 1st meeting. A hawkish surprise from the Fed could boost the
USD, negatively impacting the EUR/USD.

Technical
Overview and Key Levels

The EUR/USD
pair has displayed a bearish trend since the beginning of the year,
characterized by a structured decline on lower timeframes and navigating within
a downward trend channel. Notably, the currency pair breached the 45-day
exponential moving average (EMA) channel on the daily chart and is now nearing
the 200-day EMA support level. A critical juncture for the Euro lies ahead as
it approaches the $1.0750 to $1.0700 support zone, marked by the December low
and the 200-day EMA channel.

Key
resistance is firmly established at the $1.09 level, which has effectively
rejected upward movements three times during January, reinforcing the bearish
outlook as long as the pair remains below this threshold. Short-term resistance
is identified at $1.0850, where a break above could potentially halt or delay
the ongoing decline. On the contrary, a drop below the $1.08 mark could accelerate
the bearish momentum, paving the way towards the key support area above $1.07.

EURUSD 4Hour
Chart

Looking
Ahead

Influence of
Monetary Policy Divergence: Short-term trends for the EUR/USD will be shaped by
Eurozone inflation figures, the health of the US labour market, and Federal
Reserve policy decisions, with significant potential impacts from diverging
monetary policies between the ECB and the Fed. A hawkish stance from the Fed,
coupled with softer Eurozone inflation figures, might tilt the monetary policy
divergence in favour of the U.S. dollar.

Federal
Reserve’s Upcoming Decision: The Fed is anticipated to keep U.S. interest rates
steady, potentially signalling future cuts by altering its language on
considering further hikes. The outcome of the Fed meeting is expected to
significantly influence the EUR/USD rate, depending on the perceived likelihood
of a March rate cut.

Pivotal US
Jobs Report: Friday’s US Jobs Report is crucial, with the unemployment rate
anticipated to slightly increase to 3.8% and average hourly earnings expected
to grow by 4.1% year-over-year.

The EUR/USD
remains at the mercy of central bank policies, economic data releases, and
global market sentiment. Investors and
traders should monitor these developments along with any possible reaction
at the key technical levels that could shape the market dynamics in the short term.

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

• Prior 5.25%
• Bank rate vote 6-2-1 vs 8-1-0 expected
• Statement details to follow..

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

USD

• The Fed left interest rates unchanged as expected
  while dropping the tightening bias in the statement but adding a slight
  pushback against a March rate cut.
• Fed Chair Powell stressed that they want to see
  more evidence of inflation falling back to target and that a rate cut in March
  is not their base case.
• The latest US GDP beat expectations by a big
  margin.
• The US PCE came mostly in line with
  expectations with the Core 3-month and 6-month annualised rates falling below
  the Fed’s 2% target.
• The US Job Openings surprised to the upside
  although the hiring and quit rates remain below pre-pandemic levels.
• The latest US PMIs beat expectations by a
  big margin for both the Manufacturing and Services measures.
• The US Retail Sales beat expectations
  across the board.
• The US Consumer Confidence report came in
  line with expectations, but the labour market details improved considerably.
• The market now expects the first rate cut in May.

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 latest UK PMIs showed the
  Manufacturing sector improving but remaining in contraction while the Services
  sector continues to expand.
• 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 May.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD keeps trading inside the range
between the 1.2610 support and 1.2800 resistance. The price is currently
approaching the support level where we can expect the buyers to step in with a
defined risk below the level to position for another rally into the resistance.
The sellers, on the other hand, will want to see the price breaking lower to
invalidate the bullish setup and position for a drop into the next support
around the 1.25 handle.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
yesterday rallied into the downward trendline and got rejected as the sellers
stepped in to position for a drop into the support. The momentum then picked up
as the Fed resulted a bit more hawkish than expected and today, we can expect
some action around the support as we get the BoE rate decision and some key US
data.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a steep downward trendline defining the current bearish impulse. If we do
see a bounce from the support, we can expect even more buyers piling in on a
break above the trendline as a confirmation for a change in momentum.

Upcoming Events

Today we have the BoE rate
decision where the central bank is expected to keep everything unchanged and
later on, we will see the latest US Jobless Claims figures and the ISM
Manufacturing PMI. Tomorrow, we conclude the week with the US NFP report.

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

Heroes of Mavia, a groundbreaking Web3 AAA mobile base builder strategy game, is now available on iOS and Android app stores. This launch marks a new era in gaming, merging the thrill of strategy gameplay with the innovative aspects of Web3 technology.

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About Heroes of Mavia

Heroes of Mavia (https://www.mavia.com/) is a AAA mobile Web3 strategy game available on iOS and Android app stores globally. The game is backed by prominent investors such as Binance Labs, Genblock Capital, Delphi Digital, Mechanism Capital, Bitkraft, Animoca Brands among others. The native Heroes of Mavia tokens $MAVIA is set to launch on February 6th 2024.

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

This was already expected after the report from last week here:

• OPEC+ reportedly likely to wait several weeks before deciding on oil output policy

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

GBP/USD is trading at the lows for the day amid a firmer dollar, though the pound is also lagging slightly against the rest of the major currencies bloc. The pair is down 0.4% to 1.2628 but remains stuck in a consolidative range in the bigger picture:

That could very well change in the aftermath of the BOE meeting later today. While the central bank is expected to keep rates unchanged, there will be plenty of focus and scrutiny on the statement language and Bailey’s press conference.

I shared some food for thought earlier here: The central bank spotlight continues with the BOE today

Going back to GBP/USD, there has been some consolidation around 1.2600 to 1.2800 as of late. And eventually, something’s gotta give.

A more dovish BOE today could put in motion a breakdown of the above range. And that will tee up a drive towards the 200-day moving average (blue line) next with sellers eyeing the December lows near 1.2500 potentially as well.

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

• Inflation figures have mostly brought positive surprises recently
• Does not want to put a figure on what „slightly lower“ means
• Monetary policy has played its part in bringing inflation down
• Euro area growth prospects have deteriorated in the meantime
• Growth could even be slightly below 0.8%, as projected in December
• Full transcript

All of the language here is to tee up rate cuts that are now likely to come in either April or June. He’s alluding to softer inflation and weaker growth. And those are the two key ingredients to start the recipe of easing monetary policy in the months ahead.

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