U.S. equities were mixed over the course of yesterday’s trading. The Dow Jones Industrial Average lost 1.14% to close at 33910.85. The S&P 500 dropped 0.2% to close at 3990.97. The tech-heavy Nasdaq Composite gained 0.14% to close at 11095.11.

Equities were mixed heading into Thursday as market participants awaits monetary policy statement releases from the Bank of Japan, which shocked markets when it loosened its yield curve control during December of last year.

The benchmark U.S. 10-year treasury yield posted modest gains over the course of yesterday’s trading, and yields are currently sitting at 3.546%. The short-term 2-year treasury yield climbed 8 basis points and currently sits at 4.2%.

Goldman Sachs Group Inc. shares fell more than 6% after the financial services provider reported a drop in investment banking fees in the fourth quarter. Morgan Stanley, which also reported on Tuesday, delivered better earnings due to revenues from its assets and wealth management division. Morgan Stanley shares closed 5.91% higher over the course of Tuesday’s trading.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, traded mostly sideways over the course of Tuesday’s trading. The Greenback steadied after falling to its lowest point in more than 6 months. Recent inflation gauges have all signalled lowering price pressures, thus market participants have been rotating out of the Dollar and into equities.

EURUSD dropped 0.31% over the course of yesterday’s trading. The Euro has reached its short-term resistance level at around the 1.09 price region and is regressing back towards the 1.07 price region.

GBPUSD gained 0.78% over the course of yesterday’s trading. U.K. job reports indicated a strong labour market and rising wages, both making a case for more interest rate hikes by the BoE.

XAUUSD lost 0.38% over the course of yesterday’s trading. The Dollar denominated Gold weakened as the Dollar steadied around the 102 regions. The safe haven asset has enjoyed a smooth run to above the $1900 per ounce price level, but it remains to be seen whether the yellow metal can maintain its strong upward momentum.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair declined lower on Tuesday, losing its upside strength and dropping sharply towards the 1.0800 mark amid the souring market mood. The pair is now trading at 1.0806, posting a 0.15% loss on a daily basis. EUR/USD stays in the negative territory amid the recovery witnessed in the US Dollar, as the goodish intraday pickup in the US Treasury bond yields and a generally weaker tone around the equity markets keep providing support to the safe-haven buck. On the economic data front, investors did not react to mixed German data as the December Harmonized Index of Consumer Prices (HICP)  came at 8.6% YoY. The US Producer Price Index and monthly Retail Sales figures will be looked upon to determine the near-term trajectory for the EUR/USD pair. In the Eurozone, the comments from European Central Bank (ECB) chief economist Philip Lane have exerted bearish pressure to the Euro as he said that the central bank tightening will need to halt to get interest rates back to their target levels.

For the technical aspect, the RSI indicator is 50 figures as of writing, suggesting that the pair could witness some downside movements as the RSI is falling sharply lower. As for the Bollinger Bands, the price failed to preserve the upside traction and dropped towards the lower band, therefore the downside momentum should persist. In conclusion, we think the market will be bearish as the pair is heading to test the 1.0794 support level. Technical indicators also suggest that near-term selling is picking pace.

Resistance:  1.0868, 1.0921

Support: 1.0794, 1.0722, 1.0624

GBPUSD (4-Hour Chart)

GBP/USD advances higher on Tuesday following the UK jobs report. The UK Office for National Statistics (ONS) reported that Pay excluding bonuses rose by an annual 6.4% in the September-to-November period. In addition, the number of people claiming unemployment-related benefits fell to 19.7K in December from 30.5K previous and the jobless rate held steady at 3.7%, close to its lowest level in almost 50 years. Stronger wage growth and firmer employment might force the BoE to raise interest rates further and therefore lift GBP/USD. At the time of writing, the GBP/USD is trading at 1.2262. The next key event risk will be the UK consumer inflation figure on Wednesday. For more price action, eye on tier 1 economic figures.

For the technical aspect, RSI indicator 62 figures as of writing,  suggesting that the uptrend should persist as the RSI indicator is moving higher above the mid-line. As for the Bolling  Bands, the price advanced higher from the upward average, signalling the upside traction in neat-term. In conclusion, we think GBP/USD is in a bullish mode based on the technical analysis. For the uptrend scenario, the pair is now testing the resistance at 1.2271. The price needs a decisive breakthrough to trigger the follow-through buy interest. For the downtrend scenario, if the price drop below the support at 1.2168, it may change the current trend and head to test the next support at 1.2106.

Resistance: 1.2271, 1.2334, 1.2426

Support: 1.2168, 1.2106, 1.2013

XAUUSD (4-Hour Chart)

Gold price edges lower for the second consecutive day this week, moving further away from its highest level since last April. Gold price witnessed some selling pressure despite better-than-expected China’s Gross Domestic Product (GDP), Retail Sales and Industrial Production data in the reported period on Tuesday. At the time of writing, the gold price is trading at $1,906.43, slightly above the $1,900 round figure mark.

For the technical aspect, RSI indicator 54 figures as of writing, sliding all the way from the overbought region, suggesting that the uptrend momentum weakened and the price is staging a downside correction. For the Bollinger Bands, the price retreated from the upper band and is now holding around the upward average. Since the moving average keeps slightly upward, the pair maintains its bullish potential. In conclusion, we think the market is in a modest bullish mode as technical analysis shows bullish potential. That said, the price is lack enough strength to stage a continued advance currently. For the uptrend scenario, the gold price needs a breakthrough above the current resistance at $1,924 to meet the bullish pattern of higher highs. For the downtrend scenario, the price is trying to defend the $1,900 area. If the price drop below $1,900, it may trigger fresh selling traction and head to test the next support at $1,893.

Resistance: 1924, 1952, 1962

Support: 1893, 1873, 1832

Economic Data

U.S. equities traded higher on the first trading day of the week. The Dow Jones Industrial Average rose 0.33% to close at 34302.61. The S&P 500 gained 0.4% to close at 3999.09. The tech-heavy Nasdaq composite climbed 0.71% to close at 11079.16.

Numerous inflation-related reports, which all point to easing price pressures, have buoyed equity markets across the globe. The re-opening of China has also provided market participants confidence towards the overall global trade and supply chains. Recessionary concerns seemed to have been completely left behind in 2022 as equity has all started the year with positive gains.

The benchmark U.S. 10-year treasury yield edged higher over Monday and was last seen trading at 3.525%. The short-term 2-year treasury yield traded lower and sits at 4.24%, as of writing.

On the earnings calendar, Goldman Sachs and Morgan Stanley will report F2022 Q4 earnings before the start of the American trading session. United Airlines will report earnings after the American equity markets close. Earnings season will remain one of the largest threats to the recent equity markets rally. Q4 earnings should begin to reflect the effects of the Fed’s aggressive rate hikes in 2022.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, rose 0.12% throughout Monday’s trading. The Dollar index, which shed more than 7% over the last four months of 2022, has continued to lose an additional 1.15% since the beginning of 2023.

EURUSD lost 0.1% throughout Monday’s trading. Germany is scheduled to release its CPI figures and economic sentiment reports, both should affect volatility surrounding the Euro.

GBPUSD lost 0.3% throughout yesterday’s trading. The Dollar rebound on Monday worked against the British Pound. The U.K. will release claimant count change and hourly wage reports during today’s European trading session.

XAUUSD dropped 0.22% throughout Monday’s trading. The Dollar denominated gold lost ground as the Dollar rebounded across markets.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair declined lower on Monday, failing to preserve its upside traction and fell back towards the 1.0800 area amid a cautious market mood on the Martin Luther King holiday. The pair is now trading at 1.0827, posting a 0.04% loss daily. EUR/USD stays in the negative territory amid the recovery witnessed in the US Dollar, as the risk-off sentiment and thin market conditions help the greenback stage a comeback. The worries about a deeper global economic downturn have revived demand for safe-haven Dollars in the absence of any relevant economic data. Meanwhile, the release of the US Consumer Price Index (CPI) report for December has accelerated the odds of further decline in the policy tightening pace by the Fed. On the economic data front, investors will focus on the release of the US Producer Price Index (PPI) data on Wednesday. In the Eurozone, the European Central Bank (ECB) is looking to reach the terminal rate by the summer.

For the technical aspect, RSI indicator 56 figures as of writing, suggesting that the upside is more favoured as the RSI stays above the mid-line. As for the Bollinger Bands, the price regained upside traction and rebounded from the moving average, therefore some upside movements can be expected. In conclusion, we think the market will be bullish as the pair might head to re-test the 1.0868 resistance level. There should be limited selling interest as technical indicators have also turned flat within positive levels.

Resistance:  1.0868, 1.0921

Support: 1.0794, 1.0722, 1.0624

GBPUSD (4-Hour Chart)

The GBP/USD pair dropped lower on Monday, coming under modest selling pressure and retreated from a one-month high above the 1.2280 mark that touched earlier today amid a goodish US Dollar recovery. At the time of writing, the cable stays in negative territory with a 0.19% loss for the day. The latest US CPI report has lifted the bets that the Fed will soften its hawkish stance amid signs of easing inflationary pressures. Therefore, investors now have been pricing in a smaller 25 bps rate hike in February. For the British pound, the speculations that the Bank of England (BoE) could be nearing the end of its rate-hiking cycle and a bleak outlook for the UK economy have both exerted bearish pressure on the GBP/USD pair. The market focus now shifts to BoE Governor Andrew Bailey’s speech on Tuesday, which might influence the British Pound and provide some impetus.

For the technical aspect, RSI indicator 52 figures as of writing, suggesting that the upside traction could remain in the near-term technical outlook as the RSI is moving northward above the mid-line. As for the Bollinger Bands, the price regained upside traction and rebounded from the moving average, therefore some upside movements can be expected. In conclusion, we think the market will be slightly bullish as long as the 1.2168 support line holds. On the upside, a break above the 1.2271 resistance level could open the door for additional gains and favour the bulls.

Resistance: 1.2271, 1.2334, 1.2426

Support: 1.2168, 1.2106, 1.2013

XAUUSD (4-Hour Chart)

Despite Wall Street will remain closed in observance of Martin Luther King Jr. day, the pair XAU/USD witnessed some selling pressure and retreated from a nine-month peak around the $1,929 area during the European trading session. XAU/USD is trading at 1913.53 at the time of writing, losing 0.35% daily. A goodish intraday US Dollar recovery drives flow away from the US Dollar-denominated Gold, as the greenback stalled its recent downtrend and staged a solid recovery from a seven-month low. However, the growing expectations that the Fed will soften its hawkish stance could cap any meaningful upside for the US Dollar. Several Fed officials backed the case for smaller rate hikes and reaffirmed bets for a smaller 25 bps lift-off in February, which could act as a tailwind for the Gold price.

For the technical aspect, RSI indicator 64 figures as of writing, suggesting the pair’s lack of near-term directions as the RSI remains flat. For the Bollinger Bands, the price witnessed selling pressure and retreated from the upper band, therefore a continuation of the downside trend can be expected. In conclusion, we think the market will be slightly bearish as long as the 1,924 resistance line holds. A pullback below the 1,893 mark is more likely to attract fresh sellers and remain limited near the 1,893-1,873 region.

Resistance: 1924, 1952, 1962

Support: 1893, 1873, 1832

Economic Data

U.S. equities continued to climb on the last trading day of the week. All 3 major indices closed the week out in positive territory amid easing concerns over inflation. The Dow Jones Industrial Average rose 0.33% to close at 34302.61. The S&P 500 gained 0.4% to close at 3999.09. The tech-heavy Nasdaq Composite climbed 0.71% to close at 11079.16.

The December U.S. CPI report, which was released on the 12^th, showed the rate of consumer price increases rising at a slowing rate over the year; furthermore, consumer prices have dropped by 0.1% over the month. Easing price pressure sparked last week’s rally across equity markets; however, market participants should not completely disregard the Fed’s hawkish stance as, over the past month, Fed officials have continued to echo their intentions to increase terminal interest rate targets and keep interest rates higher for longer periods.

The benchmark U.S. 10-year treasury yield was last seen trading at 3.498%, while the short-term 2-year treasury yield dropped below 4.3% and is trading at 4.224%, as of writing.

On this week’s economic docket, the U.S. will release its retail sales and PPI figures on the 18^th and weekly jobless claims figures on the 19^th.

On the earnings calendar, Goldman Sachs and Morgan Stanley will report earnings on the 17^th.  Proctor and Gamble and Netflix will release earnings on the 19^th.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, lost 0.06% throughout last Friday’s trading. The Dollar index closed 1.67% lower over last week. Easing price pressure, signified by the soft CPI report released on the 12^th, has acted as a headwind for the Dollar.

EURUSD lost 0.19% throughout last Friday’s trading. The Euro could not advance against the Dollar as confidence in the European economy remains depressed.

GBPUSD gained 0.17% throughout last Friday’s trading. Cable posted a weekly gain of 1.17% as the Dollar continues to weaken. U.K. GDP came in at a positive 0.1% growth, month over month.

XAUUSD gained 1.24% throughout last Friday’s trading. The Dollar denominated Gold continues to find upside momentum as the Dollar falters.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair declined lower on Friday, failing to extend the previous upside momentum and dropped to a daily low below the 1.079 mark amid the speculations that the US Federal Reserve would slow the rate hikes pace. The pair is now trading at 1.0809, posting a 0.39% loss daily. EUR/USD stays in the negative territory amid the recovery witnessed in the US Dollar, as the greenback manages to regain some composure and advance to the 102.60 region on the back of the profit-talking sentiment in the risk complex. The financial markets are cheering for Thursday’s US inflation report, which showed December’s Consumer Price Index (CPI) dropping beneath 7% and core CPI below 6%. Moreover, according to the CME FedWatch Tool, odds for a 25 bps rate hike by the Federal Reserve lie at a 94.2% chance after the release of the US inflation report. In the Eurozone, the hawkish outlook remains as ECB policymaker Martins Kazaks said that there was no rationale for markets to bet on a rate cut and added that rates should rise well into the restrictive territory.

For the technical aspect, RSI indicator 61 figures as of writing, suggesting that the upside is more favoured as the RSI is now rising higher. As for the Bollinger Bands, the price regained upside traction and rebounded from the moving average, therefore some upside movements can be expected. In conclusion, we think the market will be bullish as the pair is heading to test the 1.0854 resistance level. The RSI also suggests that there is more room on the upside for the pair.

Resistance:  1.0854, 1.0921

Support: 1.0750, 1.0710, 1.0624

GBPUSD (4-Hour Chart)

GBP/USD had no clear traction on Friday as market participants has no consensus on direction. At the time of writing, the pair is still trading in a narrow range of around 1.22. In the UK, GDP for November outperformed, rising 0.1%, greater than the forecast of -0.2% but weaker than the previous of 0.5%. The overall situation is not that good, with GDP falling by -0.3% in the three months to November. The UK economy is sluggish and the Bank of England is facing difficulties as it must continue raising rates, despite the weak economy, to curb high inflation.

For the technical aspect, RSI indicator 56 figures as of writing, slightly above the mid-line, suggesting that the pair is in an uptrend but with no strong bullish momentum. As for the Bolling Bands, the price hovers around the average. The moving average holds almost horizontal, showing no clear trend in the near term. In conclusion, we think the price is waiting for a decisive breakthrough as technical analysis shows a neutral trend and the price hold in a narrow range. For the uptrend scenario, the pair is now testing the resistance at 1.2233. The price needs a decisive breakthrough to trigger the follow-through buy interest. For the downtrend scenario, if the price drop below the support at 1.2110, it may change the current trend and head to test the pivotal support at 1.1927.

Resistance: 1.2233, 1.2450

Support: 1.2110, 1.1927

XAUUSD (4-Hour Chart)

Gold price advanced above the $1,900 mark, hitting a new 9-month high at $1,921.95 on Friday as market participants speculated that the US Federal Reserve could shift to a less aggressive stance following the release of inflation data. According to the CME FedWatch Tool, there is a 94.2% chance that the FED will raise rates by 25 basis points after the release of US inflation data. At the time of writing, the gold price is trading at $1,915.64, continuing to extend gains on weekly basis.

For the technical aspect, RSI indicator 72 figures as of writing, holding above the overbought region, suggesting that the pair is in strong bullish momentum but facing the risk of a downward correction. As for the Bolling  Bands, the price goes up along with the upper bound, which is a sign of strong bullish momentum. The pair could make a downward correction in the short term before extending the rally. In conclusion, we think the gold price is in a bullish mode based on the technical analysis. That said, traders should aware of the risk of correction as the RSI indicator and Bolling Bands both signal overbought signs. For the downtrend scenario, the key support level is at $1,870. If the price drop below this level on the 4H chart, it may change the current trend and head to test the next pivotal support at $1,830.

Resistance: 1919, 1930

Support: 1870, 1830, 1775

Economic Data

The market will focus on US Producer Price Index (PPI) and Retail Sales data after last week’s US Consumer Price Index (CPI) came out as forecasted. 

Meanwhile, the Bank of Japan (BoJ) will be making its Monetary Policy Statement on 18 January. The BOJ is widely expected to keep interest rates in the negative territory.

Here are this week’s key events:

UK Claimant Count Change (17 January)

The UK saw a rise of 30,500 people claiming unemployment benefits in November 2022.

Analysts expect December’s data to be lower than November’s reading at 19,800.

Canada Consumer Price Index (17 January)

In November 2022, the CPI in Canada increased by 0.1% from the previous month. This was slower than the 0.7% increase in October.

December’s CPI reading is forecast to be higher by 0.3%.

US NY Empire State Manufacturing Index (17 January)

The New York Empire State Manufacturing Index declined 16 points from November to -11.2 in December 2022, its steepest drop since August and below market expectations of -1.

Analysts expect a sharp improvement in January but still a negative reading at -4.5.

Bank of Japan Monetary Policy Statement (18 January 2022)

The Bank of Japan shocked markets on December 20 when it widened the range around its 10-year yield target, allowing long-term rates to rise while keeping its interest rate steady at -0.1%.

BoJ is forecast to keep its interest rate in the negative territory.

UK Consumer Price Index (18 January)

The UK’s CPI increased 0.40% in November 2022 from October, the smallest increase since January of that year.

Analysts expect an increase of another 0.40% in December and could show a rise of 11.1% in the UK’s annual inflation reading.

US Retail Sales (18 January)

The US retail sales index fell 0.6% month-on-month in November of 2022, worse than market forecasts of a 0.1% fall.

Analysts expect December’s retail sales data to fall by 0.5%.

US Producer Price Index (18 January)

In November 2022, the US PPI for final demand increased by 0.3% month-on-month, matching October’s figures.

Analysts expect December’s reading to remain unchanged from November or decrease by 0.1%.

U.S. equities continued to march higher throughout Thursday’s trading. The initial CPI release sparked a downward spike across the three major equity indices, but as the American trading session began, all equity indices turned positive and closed higher by the bell. The Dow Jones Industrial Average gained 0.64% to close at 34189.97. The S&P 500 rose 0.34% to close at 3983.17. The tech-heavy Nasdaq Composite climbed 0.64% to close at 11001.11.

The benchmark U.S. 10-year treasury yield fell below 3.5% and was last seen trading at 3.445%, while the short-end 2-year treasury yield fell to 4.135%.

The December U.S. CPI figure came in at 6.5%, in line with market expectations. The Core CPI, which strips out food and energy prices, also came in at 0.3%, compared to last month’s reading of 0.2%. Market participants’ reaction to the as-expected CPI reading sparked a sell-off in futures markets before the market opened, but equity markets quickly recovered as short-term interest rate expectations fell. Markets are now pricing in a 25 basis point interest rate hike at the next FOMC meeting, and market participants are expecting 25 basis point interest rate hikes by the Fed moving forward.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, dropped 0.98% throughout yesterday’s trading. The short-term interest rate expectation dropped significantly after the CPI report, which came in as expected at 6.5%.

EURUSD rose 0.89% throughout yesterday’s trading. The weaker Dollar across markets allowed the Euro to extend its winning streak into the fifth straight day. EURUSD now faces a key level of 1.07.

GBPUSD rose 0.51% throughout Thursday’s trading. During today’s European trading session, the British GDP will be released. A softer reading of the British GDP could spark a rally for the British Pound.

Gold surged 1.1% throughout yesterday’s trading. The Dollar denominated Gold continues to climb above the $1850 per ounce mark as the Dollar continues to weaken.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair advanced higher on Thursday, regaining upside traction and advanced for the fifth consecutive session following the release of US inflation figures during December. The pair is now trading at 1.0808, posting a 0.49% gain daily. EUR/USD stays in the positive territory amid a weaker US Dollar across the board, as the Inflation data triggered a decline of the greenback which trims losses after the Wall Street opening bell. The crucial US Consumer Price Index (CPI) declined to 6.5% every year in December from 7.1% in November, which came in line with the market expectation and decreased further from the multi-decade peak posted in June of 9.1%. Moreover, the comments from the Philadelphia Fed President Patrick Harker also exerted additional bearish pressure on the US Dollar, as he said it was time for future Fed rate hikes to shift to 25 basis points increments. In the Eurozone, the Euro is expected to thrive amid attractive ECB monetary policy amid the hawkish comments across the typical dove and hawk camps within the ECB.

For the technical aspect, RSI indicator 71 figures as of writing, suggesting that the pair could witness some short-term correction as the RSI is retreating from the overbought zone. As for the Bollinger Bands, the price moved out of the upper band but then move immediately back inside the band, therefore some downside movements can be expected. In conclusion, we think the market will be slightly bearish as the pair is still testing the 1.0786 resistance level.

Resistance:  1.0786, 1.0921

Support: 1.0722, 1.0612, 1.0508

GBPUSD (4-Hour Chart)

GBP/USD advanced further after the release of the US inflation figures. The US Bureau of Labor Statistics reported that the consumer price index fell 0.1% in December, meeting expectations, the biggest drop since April 2020. The core CPI, which excludes food and energy, rose 0.3%, also in line with estimates. On an annual basis, headline CPI rose 6.5% while core increased 5.7%. CPI report confirms that the inflation slowdown in the US, Fed’s Harker expects 25 bps hikes now. The US dollar index fell further to 102.3, which favours GBPUSD. At the time of writing, the pair is trading at 1.221. For more price action, eye on the UK GDP report on Friday.

For the technical aspect, RSI indicator 67 figures as of writing, above the mid-line, suggesting that the pair is in bullish momentum. As for the Bolling  Bands, the price edge is higher along with the upward average, signalling modest upside traction. The uptrend should persist. In conclusion, we think the gold price is in a bullish mode based on the technical analysis. For the uptrend scenario, the pair is now testing the resistance at 1.2233. The price needs a decisive breakthrough to trigger the follow-through buy interest. For the downtrend scenario, if the price drop below the support at 1.2110, it may change the current trend and head to test the pivotal support at 1.1927.

Resistance: 1.2233, 1.2450

Support: 1.2110, 1.1927

XAUUSD (4-Hour Chart)

The gold price soared to a fresh multi-month high after the release of the US inflation figures. The crucial US CPI report cemented the bets on a less aggressive policy tightening by the Federal Reserve. The US Bureau of Labor Statistics reported that the consumer price index fell 0.1% in December, meeting expectations, the biggest drop since April 2020. The core CPI, which excludes food and energy, rose 0.3%, also in line with estimates. On an annual basis, headline CPI rose 6.5% while core increased 5.7%. The gold price soared to a fresh eight-month high as the US dollar index dropped to around 102.3 and the benchmark US 10 Year Treasury Yield fell to 3.45%. At the time of writing, the gold price is trading at $1,898, slightly below $1,900 and seems poised to advance further.

For the technical aspect, the RSI indicator 70 figures as of writing, close to the overbought region, suggesting that the pair is in strong bullish momentum but at risk of a correction. As for the Bolling  Bands, the price soared to above the upper bound from the upward average, signalling the strong upside traction and the possible correction. In conclusion, we think the gold price is still in a bullish mode based on the technical analysis. That said, traders should aware of the risk of correction as the RSI indicator and Bolling Bands both signal an overbought sign. For the downtrend scenario, traders should aware of the key level at $1,870. If the price drop below this level on the 4H chart, it may change the current trend.

Resistance: 1909, 1919

Support: 1870, 1830, 1775

Economic Data

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U.S. equity indices marched higher throughout Wednesday’s trading. Markets continue to expect risk-on sentiment before the release of the U.S. CPI report, which is scheduled to be released during today’s American trading session. The Dow Jones Industrial Average rose 0.8% to close at 33973.01. The S&P 500 climbed 1.28% to close at 3969.61. The tech-heavy Nasdaq Composite jumped 1.76% to close at 10931.67.

Market participants are pricing in a softer reading for the CPI report, which would aid the rhetoric of a slower interest rate hike by the Fed; however, recent remarks from Fed FOMC members have continued to point towards a higher terminal rate. Professionals across industries have also called for the Fed to pause interest rate hikes to access the impact of 2022’s interest rate hike effects. A more conclusive result should come soon, though, as late January and February roll around the corner, corporations will soon release their 2022 Q4 earnings.

The benchmark 10-year treasury yield has retreated below 3.6% and was last seen trading at 3.55%, while the short-term 2-year treasury yield was last seen trading at 4.288%.

Bank of America, JP Morgan Chase, Wells Fargo Corp., and Citi Group Inc. will headline earnings on the 13^th.

Main Pairs Movement

The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, traded mostly sideways throughout the 11^th. The Dollar index notched a 0.1% gain and is currently trading around the 103.2 range.

EURUSD gained 0.22% throughout yesterday’s trading. Falling U.S. yields and falling short-term interest rate expectations have allowed the Euro to gain against the Dollar for four straight sessions.

GBPUSD saw minimal price movements throughout Wednesday’s trading. The British Pound could not gain much ground against the Dollar, despite a broadly weakened Dollar.

Gold lost 0.05% throughout yesterday’s trading. The Dollar denominated Gold has reached its short-term resistance level at $1880 per ounce and is currently consolidating around the $1876 per ounce price region.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair advanced higher on Wednesday, preserving bullish momentum and climbed to its highest level since late May above the 1.0770 mark amid expectations for less aggressive policy tightening by the Federal Reserve. The pair is now trading at 1.0756, posting a 0.22% gain daily. EUR/USD stays in the positive territory amid renewed US Dollar weakness, as the greenback continued to weaken after Fed Chair Jerome Powell’s speech on Tuesday failed to provide any forward guidance. In the meantime, Fed policymakers are revising their policy projections after a drop in wage inflation. On the economic data front, the crucial US CPI report on Thursday will play a key role in influencing the Federal Reserve’s rate-hike path and driving the price of the EUR/USD pair in the near term. A stronger US CPI print will lift bets for a more hawkish Fed. In the Eurozone, French central bank governor Francois Villeroy de Galhau said the ECB should aim to reach the terminal rate by the summer, confirming they would have to raise rates further in the coming months.

For the technical aspect, RSI indicator 67 figures as of writing, suggesting that the pair could witness more upside movements as the RSI stays near the overbought zone. As for the Bollinger Bands, the price regained upside traction and climbed towards the upper band, therefore the upside momentum should persist. In conclusion, we think the market will be bullish as the pair is now testing the 1.0750 resistance level. Technical readings in the 4-hour chart also reflect bulls’ control.

Resistance:  1.0750, 1.0787

Support: 1.0710, 1.0584, 1.0508

GBPUSD (4-Hour Chart)

GBP/USD went flat around the price at 1.2125, since the Fed’s Powell speech did not provide any forward guidance for the February 1 FOMC meeting,  after hitting a daily high of 1.2178, the selling pressure dragged the GBP/USD down, however, this pair rebounds toward 1.2150 as US Dollar weakens and hit the support at 1.211, and it might be a signal of sizeable correction. As the global monetary policy tightening cycle matures, the first half of this year will go bearish and the second half will have some strength emerging against a generally overvalued USD since the investors will expect an easier Fed policy and move out of the Greenback.

For the technical aspect, RSI indicator 14 figures as of writing, it’s a suggestion of strong buying signals and indicates there will be an oversold or undervalued condition, estimated to be bullish and will rebound from the bottom. However, as for the Bollinger Bands, it’s closing, which indicates the volatility f this pair is going smoothly, it may be the consequence of the periods of high volatility from the last few days. In the US, the last speech of the Fed’s Powell on Tuesday did not provide any forward for the FOMC meeting, and a lack of fundamental drivers and high-tier data releases, however, investors could stay on the sidelines and the main indexes could have a hard time making a decisive move in either direction. On the UK side, the monthly GDP and the yearly Manufacturing Production will be the key short-term indicator for Pounds.

Resistance: 1.2233, 1.2450

Support: 1.2110, 1.1927, 1.1765

XAUUSD (4-Hour Chart)

Gold prices have no clear direction on Wednesday as the market is lack consensus before US key event-CPI report. The earlier gold price soared to $1,886.59, a multi-month high, and then started to decline in the US trading session. At the time of writing, the gold price is trading at $1,877.17. Market participants now focus on US inflation figures. The crucial US CPI report on Thursday will play a key role in influencing the Federal Reserve’s rate-hike path and driving Gold prices in the near term. A stronger US CPI print would increase bets on a more hawkish Fed and therefore weighting on the gold price.

For the technical aspect, RSI indicator 59 figures as of writing, holding slightly above the mid-line, suggesting that the pair is in bullish mode but has no strong momentum. For the Bolling  Bands, the price is hovering between the upward average and upper bound. The upward trend should persist. For the price action, the price tried to make an upward breakthrough but fail as traders would not place aggressive bets ahead of the key event risk. In conclusion, we think the gold price is still in a bullish mode based on the technical analysis. For the uptrend scenario, the price needs a decisive breakthrough to trigger the follow-through buy interest. For the downtrend scenario, a trader should aware of the key level at $1,830. If the price drop below this level on the 4H chart, it may change the current trend. That said, the focus remains on consumer inflation figures from the US, which will directly influence the financial market.

Resistance: 1879, 1889

Support: 1830, 1775, 1735

Economic Data

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Forex trading involves development and growth — it’s about increasing your understanding and becoming more confident as a trader. But this can be difficult to achieve without the right software to assist you. You need software that will help you practise making moves — and mistakes — without punishing you. You need a solution that allows you to learn how to trade forex without the added pressure of capital risk. 

This is what the demo account of MetaTrader 4 is all about. This demo MT4 account allows you to practise trades and develop practical skills without putting any real money forward. There’s no potential profit, but there’s nothing to lose, either!

Understanding MetaTrader 4’s different options

What’s the difference between the live account and the MetaTrader demo account? Take a look below.

The MetaTrader 4 live account

MetaTrader 4’s live account is the full version of the platform. This is where you’ll put forward portions of your own capital reserves to make trades and open positions in the forex market. You’ll be able to speculate on whether you think your chosen currency pair will increase or decrease in value — open a buying position on pairs you believe will rise and open a selling position on those you think will fall.

When you close your position, success or failure depends on the final market performance of the pair. So, you will take your profit if your predictions are right and absorb your losses if the market goes the other way. This is where the risk factor of the forex market comes into play — profits are never guaranteed during trading, and it takes experience and understanding to develop more reliable strategies. Even traders with this experience may sometimes find that the market doesn’t move as they intended it to.

The demo MT4 account

The demo version of MT4 allows players to build this experience without the risk of losing capital. Working with a reserve of virtual funds — not real capital — you’ll be able to make trades on forex pairs and test your strategy ahead of real-life trades. 

Choose from a range of different markets and utilise the intuitive dashboard to analyse the market’s direction. Then, get used to the mechanisms of opening and closing trades. It’s highly recommended that you use the MT4 demo account before getting started in the real market.

The benefits of using the MetaTrader 4 demo account

Why use MT4 demo accounts? Why not just get straight into trading on the full version of the platform? Well, there are many reasons why a more measured and careful course of incremental growth is better than jumping in at the deep end. A sink-or-swim approach might work for some things, but forex trading is not one of them — the stakes are simply too high in this environment.

Let’s take a look at the advantages of the MetaTrader demo account, exploring all the benefits of using this demo account for MT4 before you step your trading strategy up a gear.

Learn vital skills without the risk

Trading on the forex market can be difficult. Gaining the skills necessary to trade confidently will always take time and experience. Of course, in a fast-paced trading environment like the foreign exchange market, gaining this time and experience is not easy without exposing yourself to considerable risk. This is where the demo account can make all the difference.

You’ll be able to take all the time you need, opening and closing positions and gaining genuine experience in the market. As you build your confidence, you’ll find yourself better equipped to make trades. This, in turn, will prepare you for graduating from the demo MetaTrader 4 account to the full live version. There will still be risks, but you will have the skills required to navigate these risks carefully and deliberately.

Practice with a full suite of tools

One of the best things about the MT4 demo is its comprehensive nature. MetaTrader 4 is an expansive and highly capable platform packed with tools and features that help traders open and keep track of positions while conducting advanced market analysis. This kind of data-driven approach is critical to developing a trading strategy, allowing traders to forecast the future performance of forex pairs. With the MetaTrader 4 demo, you have all this capability at your fingertips.

Tools like stop-loss and take-profit mean you can keep your trade within sustainable parameters. Meanwhile, indicators such as moving averages (MAs) and Relative Strength Indices (RSIs) assist you as you derive even more insight and understanding from the platform. A range of different view configurations is critical as you leverage the MT4 dashboard quickly and without delay. You can rest assured that all of this — and more — are included in the demo version of the MT4 platform, so you can spend time getting to know how you will incorporate all of this into your strategy.

In addition, you’ll be able to work with various add-ons that provide flexibility and personalisation to the MT4 trading experience. These include the alarm manager — a useful feature that enables customised alarms and alerts that keep you informed of the latest movements even outside of the platform, harnessing SMS and email integration. The mini terminal is another useful MT4 feature found on the platform’s demo version. This is where you’ll gain quick, one-click access to various trading functions and data points, streamlining how you use the solution.

Understand real forex market mechanics

The forex market is subject to the forces of supply and demand. When supply increases but demand falls, the currency’s price also falls. When demand increases and supply falls, the price moves in the opposite direction. A wealth of different geopolitical and economic factors will influence this, giving us a highly complex set of market dynamics that traders will need to get to grips with as they develop their future strategies.

In this sense, the demo version of MT4 works just the same way as the live version. When you view the MT4 dashboard, you’ll witness all of these market movements, examining the movements of forex pairs in real-time. You’ll see how prices shift at times of high trading volumes, and you’ll begin to develop the kind of tactics and trading schedule that will become core to your strategy moving forward. Simply put, the MetaTrader 4 demo gives you everything you can expect from the full account without the potential for profit and loss.

Road-test your strategies

Let’s say you have been trading forex for a little while and don’t need further learning or development. Is the demo MT4 account worth it? Yes. If you have an idea for a new strategy, for example, or a new plan of action you want to try out, it’s probably not a good idea to experiment with this on the live account.

Instead, use the demo version. Experiment with different tactics and strategic moves until you are confident that you have developed a coherent and potentially successful plan. Then you can deploy this plan in the live environment — there will still be a risk that the strategy doesn’t work, but you will have given yourself a better chance of success.

Hone your timing

For short-term trades in particular, timing is everything. The market can move very quickly, which means a delay of just a few seconds can result in a significant price movement on a scalping trade. You’ll need to get used to executing trades with zero delays and latency.

MetaTrader 4 is certainly well-equipped to achieve this, but you need to get used to making those rapid moves whenever you need to. This is where honing your approach on the demo account of MT4 is so important. Minimise those delays and achieve agile opening and closing before you start trading with real money.

Get started with the MetaTrader 4 demo at VT Markets

Here at VT Markets, we want to give our users the tools they need to develop their own forex trading strategy. This means offering powerful features that enable traders to open and close positions without delay while gathering the data they need to make their next move. 

In addition, we offer the demo version of the MT4 platform, allowing you to grow your skills in a risk-free environment. Set up your demo account and move on to a live account when ready. Want to discover more about trading with VT Markets and MT4? Reach out to our team today.