S&P 500 futures are now up 0.4% with tech stocks leading the charge once again after the gains yesterday. Nasdaq futures are up 0.7% while Dow futures are up 0.2% currently. After having struggled earlier in the week, equities are producing quite a solid turnaround in fortunes yesterday and so far today.

The S&P 500 index itself now looks to be setting up for a test of the 4,800 mark once again. That has been a key technical level that has prevented a break to fresh all-time highs, so there is that to watch out for. If that gives way, expect risk sentiment to go running as we look towards the closing stages of this week.

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

USD

• The Fed left interest rates unchanged as
  expected at the last meeting with a shift in the statement that indicated the
  end of the tightening cycle.
• The Summary of Economic Projections showed a
  downward revision to Growth and Core PCE in 2024 while the Unemployment Rate
  was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts
  in 2024 compared to just two in the last projection.
• Fed Chair Powell didn’t
  push back against the strong dovish pricing and even said that they are focused
  on not making the mistake of holding rates high for too long.
• The latest US CPI
  slightly beat expectations but analysts expect the Core PCE to print at 0.2%
  M/M again following the CPI data.
• The labour market continues to soften but remains
  resilient with US Jobless Claims beating
  expectations week after week.
• The latest ISM Manufacturing
  PMI
  beat expectations, while the ISM Services PMI missed
  by a big margin.
• The US Retail Sales beat
  expectations across the board.
• The Fed members recently have been pushing
  back on the aggressive rate cuts expectations.
• The market expectation for a rate cut in March fell
  to roughly 50%.

AUD

• The
  RBA left interest rates unchanged as expected at the last meeting with
  the central bank maintaining the usual data dependent language.
• The
  recent Monthly CPI report missed expectations across
  the board which is another welcome development for the RBA.
• The
  latest labour market report missed expectations by a big
  margin.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  latest Australian PMIs improved but remain in contraction.
• The
  market expects the RBA to start cutting rates in June.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD bounced
on the key support zone
around the 0.65 handle as the price got overstretched on the downside as
depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the sellers will have a much better risk to reward
setup around the downward trendline where
they will also find the confluence with the
Fibonacci retracement levels.
The buyers, on the other hand, will want to see the price breaking above the
trendline to invalidate the bearish setup and increase the bullish bets into
the 0.69 resistance.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with
the MACD as it
was approaching the key support zone. This is generally a sign of weakening
momentum often followed by pullbacks or reversals. In this case, it should be
an extra confirmation for a pullback into the trendline. At the moment, we have
a minor upward trendline defining the uptrend on this timeframe. The buyers
will likely keep on leaning on it to extend the rally into the major trendline
while the sellers will want to see the price breaking lower to pile in and
target a break below the key support.

Upcoming Events

Today, the only notable event will be the University
of Michigan Consumer Sentiment survey.

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

The more bullish upgrade by BofA on Apple shares is the only relevant headline that I can allude to in helping to push US futures higher in the past hour. S&P 500 futures are now up 0.3% with Nasdaq futures up 0.7%, while Dow futures are flat. So, that sort of gives you an idea of where the gains are coming from.

Apple shares are up nearly 2% in pre-market trading and that seems to be lighting up the tech space and equities sentiment ahead of US trading later. That being said, just be wary that action in the bond market could still make things a little messier later in the day.

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

Yesterday, the Dow Jones remained under pressure as
the market continued to reprice the aggressive rate cuts expectations following
Fed’s Waller
comments. Moreover, the economic data surprised once again to the upside with
the US Retail Sales beating
expectations across the board and Industrial Production edging
up. Overall, the soft-landing narrative is still intact but in the short term
the market is readjusting to tighter monetary conditions.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones fell
below the red 21 moving average as the
bearish momentum continues to weigh on the market. We can also see that the
recent upside price action has been diverging with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the target for the pullback should be the 37066 level,
while a break below it would confirm a reversal.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more
clearly the divergence with the MACD and the recent pullback from the all-time
high. The buyers should step in around the 37066 level with a defined risk
below it to position for another rally into a new all-time high. The sellers,
on the other hand, will want to see the price breaking lower to increase the
bearish bets into the 36030 level.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have a resistance zone
around the 37400 level where we can also find the red 21 moving average for confluence. If
the price were to pull back into that resistance, we can expect the sellers to
step in to position for a drop into the 37066 level and target a break below
it. The buyers, on the other hand, will want to see the price breaking higher
to invalidate the bearish setup and increase the bullish bets into a new
all-time high.

Upcoming Events

Today, we will see the latest US Jobless Claims
figures, while tomorrow we conclude the week with the University of Michigan
Consumer Sentiment survey.

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

A rebound in Chinese stocks and a slight softness in the dollar is helping to keep AUD/USD higher so far today, even with a rather poor Australian jobs report earlier here. The currency pair is up 0.3% to 0.6565, also assisted by a technical bounce off its December low:

However, the pair is now caught in a bit of a technical box in between its 100-day (red line) and 200-day (blue line) moving averages. The former is at 0.6513 with the latter at 0.6580 and that provides two key lines in the sand for buyers and sellers to work with respectively.

To continue the downside momentum, sellers will have to chase a break below the December low of 0.6525 and then the 100-day moving average at 0.6513. Meanwhile, to reverse the momentum, buyers will have to push for a break back above the 200-day moving average at 0.6580 currently.

So, that offers up a range for the pair to do some pushing and pulling before figuring out what the next move is.

The near-term chart dictates that sellers are still in control but the daily chart as seen above, looks to be taking precedent on price action importance. The aussie might be looking steadier so far today on the factors mentioned but it is now up to buyers and sellers to prove their mettle in the technical battle above.

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

The dollar is trading a little mixed but not much changed overall, after being slightly lower earlier in the day. EUR/USD moved up to 1.0905 before keeping flattish around 1.0888 now while USD/JPY fell to a low of 147.65 before recovering to 147.91 at the moment. In my view, the lack of impetus has much to do with some indecision in the bond market for now:

10-year yields in the US broke above 4.10% after the retail sales data yesterday but there has been a lack of follow through after. Yields are down 2.5 bps today to 4.079% and more importantly, nudging back below the 200-day moving average (blue line) of 4.084%. I would say that is sort of keeping broader markets on edge in trading today.

Major currencies are not really doing a whole lot across the board while equities are also looking fairly tentative for the time being. European stocks are slightly higher but it comes after the heavy losses from earlier this week, while S&P 500 futures are up just 0.1%. So, that is not really helping to give traders much to work with.

Coming up later, we will have the US weekly jobless claims and Philly Fed manufacturing index. Those are minor releases but could offer an excuse for traders to act upon. Otherwise, the lack of any inspiration as seen so far today is not really providing traders with much conviction.

The bond market especially is the one to watch as traders are watching to see if yields will keep the break of the key technical level above or if yesterday’s reaction will be faded. That is sort of where we are at now.

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

Yesterday, the S&P 500 remained under pressure
as the market continued to reprice the aggressive rate cuts expectations
following Fed’s Waller
comments. Moreover, the economic data surprised once again to the upside with
the US Retail Sales beating
expectations across the board and Industrial Production edging
up. Overall, the soft-landing narrative is still intact but in the short term
the market is readjusting to tighter monetary conditions.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
fell again below the red 21 moving average as the
bearish pressure remains strong. From a risk management perspective, the buyers
will have a better risk to reward setup around the support at 4700.
If the price breaks right through it, the sellers will increase the bearish
bets into the 4547 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price was diverging with
the MACD right
at the all-time high. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. The target for the pullback should be right
around the support zone at the 4700 level where we can also find the 38.2% Fibonacci
retracement level for confluence. This
is where the buyers should step in with a defined risk below the zone and
target a new all-time high.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the current price action and we can see that we have a minor trendline
defining the current bearish momentum. The sellers should lean around the
trendline to position for a break below the support and target the 4547 level.
The buyers, on the other hand, will want to see the price breaking higher to
invalidate the bearish setup and increase the bullish bets into a new all-time
high.

Upcoming Events

Today, we will see the latest US Jobless Claims
figures, while tomorrow we conclude the week with the University of Michigan
Consumer Sentiment survey.

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

,

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.
• Governor Bailey pushed back against rate cuts
  expectations as he said that they cannot state if interest rates have
  peaked.
• The 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 showed the Manufacturing sector falling
  further into 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 Q2.

JPY

• The BoJ kept its monetary policy unchanged at the last meeting 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 and that they are not foreseeing
  sustainable price increases unless wage growth picks up.
• The latest Japanese CPIshowed that inflationary pressures
  are easing although they remain well above the BoJ’s 2% target.
• The latest Unemployment Rate remained unchanged near cycle lows.
• The Japanese Manufacturing PMI fell further into contraction but
  the Services PMI ticked higher remaining in expansion.
• 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.
• The Tokyo CPI, which is seen as leading indicator
  for National CPI, eased further but the Core-Core measure remains stuck at
  cycle highs.
• The market expects the BoJ to hike
  in Q2.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY broke
through the key resistance zone
around the 184.40 level and after a retest, extended the rally to new highs
with the hot UK CPI report today increasing the bullish momentum. The buyers
will look for dip-buying opportunities while the sellers should lean on the
cycle high around the 188.68 level to position for a drop back into the 178.00
handle.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
been diverging with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might see a pullback into the trendline where we
can also find the confluence with the
50% Fibonacci retracement level
and the red 21 moving average. The
sellers, on the other hand, will want to see the price breaking lower to
position for a drop into the 184.40 support and target a break below it.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the current price action with the spike higher following the UK CPI
release. We can also see the key support zone around the 186.00 handle
highlighted by the green box. That’s where the buyers will have a better risk
to reward setup, while the sellers will know if they could start to position
for much lower prices in case we see a break.

Upcoming Events

Today, we will get the US Retail Sales and
Industrial Production data, while tomorrow we will see the latest US Jobless
Claims figures. On Friday, we conclude the week with the Japanese CPI, the UK
Retail Sales and the University of Michigan Consumer Sentiment survey.

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

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

No changes to the initial estimates and with a slight easing of core prices from November to December, it still keeps the ECB on track. However, the real challenge will be starting from this year, as the disinflation process may not be as linear a trajectory as seen in 2023.

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