<p>The major US stock indices are ending lower on the day led by the NASDAQ index with a decline of about -1.6%. However, that comes after some pretty strong gains including a 3.25% gain yesterday.</p><p>The final numbers are showing:</p><ul><li>Dow Industrial Average fell -127.93 points or -0.38% at 33926.00</li><li>S&P index fell -43.26 points -1.03% at 4136.49</li><li>NASDAQ index fell -193.85 points or -1.59% at 12006.96</li><li>Russell 2000 fell -15.68 points or -0.78% at 1985.53</li></ul><p>For the trading week, the S&P and NASDAQ closed higher, but the Dow Industrial Average had a small decline as traders rotated away from the relative safety of the down into the tech heavy NASDAQ:</p><ul><li>Dow Industrial Average fell -0.15%</li><li>S&P index rose 1.62%</li><li>NASDAQ index rose 3.31%</li></ul><p>Technically, for the NASDAQ index enclosed above its 200 day moving average at 11465.53 for the second consecutive week. Last week, the price closed above on Friday, but traded back below the moving average on Monday and Tuesday before rotating back to the upside. Stay above the 200 day moving average keeps the buyers in firm control. The NASDAQ index has been up for five consecutive weeks. The price is up 17.6% from the low during the week of December 27, 2022.</p>

This article was written by Greg Michalowski at www.forexlive.com.

<p>WTI crude oil futures settled at $73.39 today. That was down -$2.49 or -3.28%. </p><p>The high price reached $78.00 today. The low reached $73.13. The price traded to the lowest level going back to January 23. The low for the year reached $72.46 back on January 5th. The cycle low from December reached $70.08. </p><p>For the week, the price of crude oil tumbled by $8.06%. The close last week was up at $79.68.</p><p>Taking a broader look at the weekly chart, the price of crude oil has been moving up and down since November 21 week. Since that week, the price has seen resistance near the 50% of the move up from the November 2020 low near $82.07 (the high reached $82.64), and support near the 61.8% of the same move at $70.84 (the low dipped to $70.08). The 100 week MA at $83.36 is also a key level that the price has been able to stay below since breaking on the week of November 14, 2022. </p>

This article was written by Greg Michalowski at www.forexlive.com.

<p>The EURUSD has fell below the 100/200 hour MAs after the jobs report and also below a swing area that was a ceiling going back to mid- January between 1.0866 and 1.0874 (see lower „Red Box“ on the chart above). </p><p>The price decline continued toward the next target near 1.0799 and 1.0805. The subsequent corrective move higher stalled near the swing area again near 1.0866 to 1.0874 before restarting the downward move. These levels were outlined in my earlier video <a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/the-strong-us-jobs-report-sent-the-us-dollar-sharply-higher-what-next-20230203/“ target=“_blank“ rel=“follow“>HERE</a>. </p><p>The price low has just reached the 1.0799 target. </p><p> What now?</p><p>Dip buyers will want to see this level hold. Risk is defined and limited against the area. If it holds, and the price can get back above the broken 38.2% a 1.08207, the buyers will look toward 1.08345 and above. </p><p>On the downside, on a break below 1.0799, I would expect more selling with the same midpoint of the 2023 trading range at 1.07558 along with the low of the lower „red box“ between 1.0760 and 1.0775 as a target area. A move below that level is another key target area to get to and through if sellers are to take back more control.</p><p>Meanwhile, stocks have continued the drip to the downside. </p><ul><li>Dow is down 165 points or -0.46%</li><li>S&P is down -45 points or -1.07%</li><li>NASDAQ index is down -194 points or -1.59%</li></ul>

This article was written by Greg Michalowski at www.forexlive.com.

<ul><li>A 25 bps or 50 bps rate hike in May is possible</li><li>If core inflation remains persistent, 3.50% terminal rate is the minimum</li><li>Thursday decision is a hawkish one so market reaction has been surprising</li></ul><p style=““ class=“text-align-justify“>Well, they are really coming out to make it clear to markets that March isn’t going to be the last rate hike in this tightening cycle. I think the issue for me is why couldn’t we just hear something like this from Lagarde yesterday? Geez.</p>

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

<p style=““ class=“text-align-justify“>In case you need a reminder on what happened in January:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-dollar-sinks-on-hard-landing-fears-after-ism-services-survey-plunges-20230106/“ target=“_blank“ rel=“follow“>US dollar sinks on hard landing fears after ISM services survey plunges</a></li></ul><p style=““ class=“text-align-justify“>While the main focus is on the US non-farm payrolls first and foremost, it may not be the most important data release on the day. The ISM services report saw a stark miss in December (49.6 vs 55.0 estimated) and the reading is expected to come in at 50.4 today.</p><p style=““ class=“text-align-justify“>As much as broader markets may be paying attention to the US jobs report, another big miss could really set off fears of a hard landing and that could compound the pain in the equities space so far on the day.</p>

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

<p style=““ class=“text-align-justify“>Easy come, easy go. After yesterday’s gains, stocks are giving a chunk of that back today ahead of the US non-farm payrolls later today. There are a couple of moving parts, so let’s try to sort things out.</p><ol><li style=““ class=“text-align-justify“>Apple and Alphabet reported misses on earnings after the close and that is weighing on tech sentiment; Nasdaq futures down 1.5%</li><li style=““ class=“text-align-justify“>European bond yields recover slightly from yesterday’s drop as ECB policymakers talk up more rate hikes after March; 10-year German bund yields up 8 bps to 2.14%</li><li style=““ class=“text-align-justify“>A further cooling of the US jobs data later could bolster the narrative of a less soft landing, especially as the Fed keeps its resolve to tighten rates further</li></ol><p style=““ class=“text-align-justify“>It’s pretty much a case of pick your poison but I wouldn’t rule out a turnaround in sentiment later in the day as Wall Street enters the fray. After all, the technicals are still supportive although we are seeing the S&P 500 near key resistance from its 100-week moving average:</p>

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

<p style=““ class=“text-align-justify“>The report highlights that China’s policymakers are planning to increase support for domestic demand this year but they are likely to stop short of coming up with a big stimulus injection on direct consumer subsidies – instead keeping their main focus on investment. The sources said that China is expected to stick more closely to its familiar playbook of policies and provide support to key industries as well as splurge on infrastructure.</p><p style=““ class=“text-align-justify“>“There are limited options to stimulate consumption. The possibility of giving cash handouts is small.“</p><p style=““ class=“text-align-justify“>Now that we are trying to recalibrate to the post-pandemic era in China, common prosperity remains the number one goal for Xi and trying to bolster domestic consumption is arguably one of the biggest challenges.</p>

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

<ul><li>Prior -0.9%; revised to -1.0%</li><li>PPI +24.6% vs +22.5% y/y expected</li><li>Prior +27.1%; revised to +27.0%</li></ul><p style=““ class=“text-align-justify“>Euro area producer prices surprised to the upside in December, with more expensive energy prices being the main driver again – rising 2.5% on the month. If you strip that out, producer prices were seen down 0.1% on the month instead.</p>

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

<ul><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/boe-raises-bank-rate-by-50-bps-to-350-as-expected-20221215/“ target=“_blank“ rel=“follow“>Prior</a> 3.50%</li><li style=““ class=“text-align-justify“>Bank rate vote 7-2 vs 7-2 expected (Tenreyro and Dhingra voted to keep rates unchanged, similar to the December meeting)</li><li>Further increases in bank rate may be required</li><li style=““ class=“text-align-justify“>If there were to be evidence of more persistent pressures, then further tightening of monetary policy would be required</li><li style=““ class=“text-align-justify“>CPI likely to have peaked</li><li style=““ class=“text-align-justify“>Inflation to fall to 3.92% by Q4 2023 (previous forecast 5.2%)</li><li style=““ class=“text-align-justify“><a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ class=“terms__main-term“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa“ target=“_blank“>Inflation</a> risks still skewed significantly to the upside</li><li style=““ class=“text-align-justify“><a target=“_blank“ href=“https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2023/february-2023″ target=“_blank“ rel=“nofollow“>Full statement</a></li></ul>

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

<ul><li>50 bps rate hike</li><li>Reaffirming another 50 bps rate hike in the next meeting</li><li style=““ class=“text-align-justify“>Reiterate that inflation remains stubbornly high and that ECB is committed to fighting that</li><li style=““ class=“text-align-justify“>Repeat that policy path remains very much data-dependent</li></ul><p style=““ class=“text-align-justify“>If there is a checklist for the ECB policy decision and messaging today, the above four points will likely be it.</p><p style=““ class=“text-align-justify“>That points to quite a straightforward one in terms of what we are all expecting but there might be some subtle changes to look out for. Let’s get straight into it.</p><p style=““ class=“text-align-justify“>For one, another 50 bps rate hike today puts the ECB closer towards a peak in its tightening cycle. While they are likely to repeat another call for a 50 bps rate hike at the next meeting, it is unlikely to see Lagarde commit to anything beyond that – at least not in a firm manner.</p><p style=““ class=“text-align-justify“>As such, expect the ECB to only reaffirm a 50 bps rate hike for March. As for what comes after, that will depend on Lagarde and we are likely to just hear something more vague that offers up some flexibility.</p><p style=““ class=“text-align-justify“>In terms of the statement, we might get a change in wording on this passage potentially:</p><p style=““ class=“text-align-justify“>“In particular, the Governing Council judges that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target. Keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and will also guard against the risk of a persistent upward shift in inflation expectations.“</p><p style=““ class=“text-align-justify“>The relief for the ECB in the past few months has been that we saw a less harsh winter in Europe and energy prices have come down from extremely high levels. And even so, core inflation remains high across the region and continues to pose a problem for policymakers coming into today.</p><p style=““ class=“text-align-justify“>But in any case, the fact that we got such a development has granted the ECB more flexibility to be more hawkish as the economy continues to hold up – for now at least.</p><p style=““ class=“text-align-justify“>I think even in the event that we do see a more hawkish communique from Lagarde & co. today, broader markets are likely to be able to take that all in without as much difficulty as it would have been in the past.</p><p style=““ class=“text-align-justify“>We all know that no matter what the ECB says, we are getting closer to a peak in rates – which will see it move towards more restrictive territory. And as soon as that starts showing up on economic data releases, I reckon it would not be surprising to see a quick shift from the ECB to start acting like how the BOE is right now.</p>

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