Market Focus

Three major stock indexes weakened on Wednesday after U.S. bond yields soared and tech stocks retreated after Federal Reserve Chairman Jerome Powell signaled there was enough room to raise interest rates. The Fed said in a statement that it may be appropriate to raise interest rates “soon” and confirmed plans to end its bond-buying program in early March after the remarks. At the end of the market, the Dow Jones Industrial Average fell 0.38% to 34,168.09 points, the S&P 500 index lost 0.15% to 4,349.93 and the Nasdaq Composite Index added 0.02% to 13,542.12 points

Of the 11 sectors of the S&P 500, 9 ended lower, with the real estate sector falling the most, down 1.66%. The biggest winner was information technology sector, which rose 0.72%, followed by the financial sector, which rose 0.27%. Fourth-quarter earnings season is in full swing, with one in five S&P 500 companies reporting results. According to Refinitiv data, 81% of them beat expectations. Microsoft rose 2.8% after beating consensus, driven in part by its cloud business. On the other hand, Boeing fell 3% after the planemaker reported a wider-than-expected fourth-quarter loss and lower-than-expected revenue, as delayed deliveries of its 787 Dreamliner program hurt performance. On Thursday, several companies will report earnings, such as Apple, Chevron, Danaher… .

Main Pairs Movement:

The U.S. dollar closed higher across the board on Wednesday and beat all rivals in the wake of the Federal Reserve’s monetary policy decision. As widely expected, interest rates and tapering remain unchanged, but Fed Chairman Jerome Powell boosted hawkish sentiment after suggesting there was plenty of room for rate hikes. In the end, the U.S. dollar index rose 0.54% and the U.S. 10-year Treasury yield rose 0.32%

As the dollar strengthened, the pound and euro continued to weaken and head south, down 0.31% and 0.52%, respectively. AUD/USD is near a weekly low of 0.7089, while USD/CAD traded near 1.2670, and USD/JPY closed at 114.64.

Gold was the worst performer, down around $30.00 and settled at $1,816 per ounce. Crude oil kept moving north, with WTI retreating from daily highs of $87.92 to around $86.50 per barrel.

Technical Analysis:

GBPUSD (Daily Chart)

Cable traded sidelined on Wednesday ahead of the Fed monetary policy statement release. At the time of writing, the pair is settling at 1.3522. Overall risk sentiment is upbeat, as portrayed by European stock indices closed in the green, and US benchmarks opened higher earlier the day. However, despite market’s optimism, investors should be aware of geopolitical and central bank news crossing the wires, as we are now getting deeper into the Central Bank week, and the Ukraine – Russia conflict looms.

On the technical front, the GBP/USD pair is downward biased, with the RSI unable to regain 50 during today’s rally, and the long-term downtrend still tripping the pair’s steps to the upside. However, the fact that price action broke above the 50-DMA, which lies at 1.3423, suggests that the Pound might be subject to fresh demands in the near term. Nevertheless, unless the GBP/USD breaks firmly above the downtrend with a positive RSI figure, then that would open the door for further gains.

Resistance:  1..3600, 1.3830, 1.3900

Support: 1.3400, 1.3200

EURUSD (Daily Chart)

The Euro pair hovered around the familiar levels at the first half of the trading day and slid over 30 pips as the time passed into the European session. The pair now trades at 1.1294, 20 pips recovered from today’s dip owing to the optimistic sentiments during the New York trading session ahead of the Fed’s meeting. In the meantime, the Dollar Index advances some 0.12%, clings to 96.06, as the Fed looms. Furthermore, the US 10-year Treasury yield is flat, around 1.77%.

As to technical, the Euro pair is downward biased, with the RSI reads 43.94. The 50 DMA along with the 23.6% Fibonacci at around 1.1310 is the first resistance level and would be under pressure when the Fed releases its monetary policy statement. If that level is breached, the next resistance would be resistance at 1.1380, where the 38.2% Fibonacci sits. On the flip side, the pair is expected to get underpinned slightly around the 1.1230 area, followed by 2021 yearly low at around 1.1200.

Resistance: 1.1310, 1.1440, 1.1500

Support: 1.1230, 1.1200

XAUUSD (Daily Chart)

Gold is moving towards the close and down some 1.65% after falling from a $1,850.11 high to test a low of $1,814.98. The drop came on the back of a hawkish twist at the Federal Reserve event on Wednesday. Initially, the FOMC Statement offered little in the way of surprising truths with regards to the Fed’s path of the balance sheet runoff and rate increases and markets responded in kind with little enthusiasm. However, volatility kicked in just ahead of the Fed’s chair presser. Jerome Powell surprised markets with a hawkish pivot, commenting that the Fed could raise rates at every meeting if need be. Additionally, Powell said in the presser that the Fed could move faster and sooner than they did the last time which helped the US dollar to extend on pre presser gains

From the technical perspective, gold pared all of its gains this week and even dived further below the key $1,830 threshold. The pair’s outlook turned sour, as the price actions fell below the short term 20-DMA, and the RSI indicator retreated back to the average line. Moreover, the long-term downward trendline leaves the yellow metal under downside risk. To the upside, the previous support $1,830 would be a fresh resistance for the yellow metal, followed by $1,860; on the flip side, gold’s first support is at $1,800. A breach of the latter would expose the next support at around $1,765, where the November lows sit.

Resistance: 1830, 1860, 1900

Support: 1800, 1765

Economic Data:

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Market Focus

U.S. equity markets continue to be turbulent ahead of FOMC’s press conference scheduled on the 27^th. The Dow Jones industrial average lost 0.19% to close at 34,297.73, the S&P 500 slid 1.22% to close at 4,356.45 and the Nasdaq composite slumped 2.28% to close at 13,539.29. All three major equity indices experienced a sharp sell of to start the session, but saw quick recovery mid-session and then were faced with another correction towards the close. The benchmark U.S. 10 year treasury yield slid slightly to 1.778%, while the 30 year treasury yield sits at 2.124%.

Microsoft released better than expected earnings after the bell. Microsoft’s revenue increased by 20% year over year in the quarter, and net income surged by 21% to $18.77 billion. Despite better than expected operating result, shares of Microsoft traded lower during the session but is positive after earnings release.

Johnson & Johnson reported 4^th quarter sales of $24.8 billion and 2021 full fiscal year sales of $93.8 billion, a growth of 13.6% growth year over year.

Tesla is due to release earnings on the 26^th.

Main Pairs Movement:

The Dollar index gained 0.1% over the course of yesterday’s trading and the index has recovered all the lost ground since January 11^th. Dollar strength could be the reflect of market participant’s anticipation ahead of the FOMC’s press conference.

Cable gained a modest 0.05% during yesterday’s trading. A second straight session of gains for the Sterling. If the 1.348 support level continues to hold, Cable could finally break out of its yearlong downward trend.

The Euro continues to trade lower against the dollar. The EURUSD pair lost 0.21% over the course of yesterday’s trading and saw an intraday low of 1.126, but the pair was able to recover once the U.S. session began.

Gold continues its rise as global inflation sentiment remains high. The FOMC’s rate decision could bring tremendous price action to the previous metal. $1867 presents itself as the nearest resistance level for XAUUSD.

Technical Analysis:

GBPUSD (Daily Chart)

Seesawing around 1.3500, GBP/USD is flat but turning green on the day following a recovery from the lows of 1.3436 and retesting the previous downtrend resistance. The US dollar has fallen under pressure as the 10-year yields remain capped by dismal market mood. Meanwhile, the markets are in high anticipation of the Federal Reserve interest rate decision and accompanying statement. The fundamental outlook for the UK remains unclear.

On the technical front, earlier in the US session, 1.3500 was noted as an anchor point from which bulls would be expected to struggle to pull away from. However, a key level of resistance was penetrated and a higher high for the day was scored all of the way towards 1.3520. At the very end of today’s trading, cable dropped back to near 1.3500 level as the downside pressure enhanced, leaving the day flat.

Resistance: 1..3600, 1.3830, 1.3900

Support: 1.3400, 1.3200

EURUSD (Daily Chart)

During the first half of the North American session, the EUR/USD pair fell from 1.1325 towards the figure, giving way for USD bulls, who secured a 40-pip move to the daily low of the day at 1.1263. Then, as the New York session progressed later on, EUR bulls entered the market, reclaiming the 1.1300 figure. The slump today attributed to a risk-off market mood that has spurred demand for safe-haven assets. Factors like the Ukraine – Russia crisis and the Fed’s first monetary policy meeting of the year maintain market participants uneasy, as portrayed by US equities trading in the red. At the time of writing, the shared currency is trading at 1.1300.

As to technical, the Euro pair is neutral-downward biased. The 50 DMA moves close to the spot price, leading the way for the longer time-frame ones, with the 100-DMA and the 200-DMA lying at 1.1469 and 1.1708 each. Nevertheless, the bias is downward as long as the exchange rate remains below the former. On the downside, the first support of the pair would appear at the 23.6% Fibonacci, which is around 1.1300, then we have the 2-year lows around 1.1200, which is the last barricade before the pair drops further.

Resistance: 1.1380, 1.1440,1.1500

Support: 1.1300, 1.1200

XAUUSD (Daily Chart)

Gold bounced off the $1,850 per troy ounce psychological resistance but fell to the previous price levels afterward. The upside traction of the yellow metal on Tuesday may due to investor’s escalating concerns about the Wednesday’s Fed talks and the crucial Q421 and yearly report of Apple Inc., the world’s largest company by market cap. The pair now trades at $1,846, up 0.2% intraday and the momentum remains strong amid the widespread risk-off sentiments.

From the technical perspective, gold now hovers around the psychological block $1,850. The pair is upside biased, with the major DMAs below the spot price, and a RSI reads showing yet another breach over $1,850 is highly likely to occur later the day. However, the long-lasting downward slope leaves the yellow metal under downside risk. As yesterday mentioned, gold’s first resistance would be at the $1,860s, and then its last summer’s highs at around $1,900; on the other hand, gold’s first support is at $1,830. A breach of the latter would expose the next support at $1,800, followed by the November lows around $1,765.

Resistance: 1860, 1900

Support: 1830, 1800, 1765

Economic Data:

Market Focus

U.S. equity markets experienced a turbulent trading session, all three major equity indices dropped at the bell but all were able to amount an incredible comeback. The Dow Jones industrial average clawed back 0.29% to close at 34,364.5, the S&P 500 gained 0.28% to close at 4,410.13, and the Nasdaq composite gained 0.63% to close at 13,855.13. The Dow Jones industrial average clawed back more than 1000 points after being down 1,115 points mid session. The benchmark U.S. 10 year treasury yield edged higher to 1.774% and the 30 year treasury yield also moved higher to 2.114%.

Earnings season continue as Microsoft Corporation, Johnson & Johnson, and Verizon Communications Inc. are all due to report their 4^th quarter earnings after market close of the 25^th. Mixed earnings have been reported so far. The financial sector has already report some missed earnings targets, but market participants will continue to monitor earnings from the technology sector, which would be the most impacted sector by an interest rate hike. The FOMC will meet on Wednesday, followed by a press conference where chairman Jerome Powell will provide guidance on the monetary policies ahead.

Main Pairs Movement:

The Dollar Index rallied over the course of yesterday’s trading, but the index pulled back as market participants rotated into equities that fueled the equity markets’ impressive comeback.

Natural gas remained depressed as global demand for the commodity wains. Interest in this commodity remains weak as open interest continues to falter.

The Euro-Dollar pair traded lower amid Dollar strength. EURUSD traded below 1.3 as the American session began but was able to repair loses as market participants saw an opportunity to enter.

Gold ended its two-day losing streak as market participants boost the precious metal above the key resistance level at 1,840.

Technical Analysis:

Natural Gas (Daily Chart)

Open interest in natural gas futures markets shrank for the third consecutive session on Friday, this time by around 2.3K contracts, according to advanced prints from CME Group. Volume reversed two daily builds in a row and went down by around 145.5K contracts.

Friday’s decent gains in prices of natural gas was supported by short covering, as noted by declining open interest and volume. Against this, further gains appear not favoured in the very near term, with the RSI dropped below the average line. The door still open to a visit to the $3.550 region per MMBtu, or December lows.

Resistance: 4.100, 4.800, 5.500

Support: 3.800, 3.550

EURUSD (Daily Chart)

EUR/USD held up well on Monday despite the market’s deeply risk-off tone, with the pair finding good dip-buying interest when it hit the 1.1300 level earlier in the session and recovering to trade flat on the day in the 1.1320s. As has been the case for the past four sessions, the price action continues, for the most part, to stick between the 20 and 50-day moving averages at 1.1350 and 1.1315 respectively.

As to technical, the shared currency’s price action remains around the 23.6% to 38.2% Fibonacci consolidation range. The RSI indicator reads 47.64, showing slightly bearish tone. As mentioned last Friday, if the pair manages to rise back above 38.2% Fibonacci, then the outlook would improve. On the downside, a solid break under 23.6% Fibonacci should clear the way to more losses and to a test of the bottom of the retracement lines.

Resistance: 1.1380, 1.1440,1.1500

Support: 1.1300, 1.1200

XAUUSD (Daily Chart)

Gold is headed for a positive close on Monday following a heavily risk-off session and a run for safer havens. At the time of writing, gold is up 0.3% after climbing from a low of $1,829.76 and settling around the $1,840 price levels, so far with eyes on the psychological $1,850 level.

From the technical perspective, Gold has achieved to stay above the critical $1,830 price level in the last three trading days. XAU/USD is neutral-upward biased, as portrayed by the major DMAs below the spot price, but its horizontal slope leaves the yellow metal under downward pressure. To the upside, gold’s first resistance would be the robust $1,860, and for cases that breaches the long-lasting downtrend, the pair could reach its last summer’s highs at around $1,900; On the flip side, gold’s first support is at $1,830. A breach of the latter would expose the next support at $1,800, followed by the November lows around $1,765.

Resistance: 1860, 1900

Support: 1830, 1800, 1765

Economic Data:

Market Focus

U.S. equity markets continue their losses on the last trading day of the week. The Dow Jones industrial average slid 1.3% to close at 34,265.37, the S&P 500 lost 1.89% to close at 4,397.94, and the Nasdaq lost 2.72% to close at 13,768.92. The Nasdaq was heavily draw down mainly due to fears caused by Netflix and Peleton. The two company’s’ share prices enjoyed healthy gains throughout 2021, as consumers demanded in-home entertainment; however, with people resuming to pre-pandemic entertainment outlets and the Fed reserves’ imminent monetary tightening, these two companies are in desperate need of adjusting their operating strategies as 2022 unfolds. Share price of Netflix has dropped in excess of 23% since the beginning of this trading week.

The benchmark U.S. 10 year treasury yield declined slightly to 1.771%, while the 30 year treasury yield slid to 2.085%.

Looking ahead at next week’s economic docket, Thursday the 27^th will be packed with FOMC’s press conference, U.S. quarterly GDP data release, and U.S. initial jobless claim figures. These three events shall have great impact on how markets will close out the first month of 2022.

Main Pairs Movement:

With U.S. treasury yields receding, the Dollar index faltered as well. The DXY closed 0.14% lower after Friday’s trading but was still able to close the week with a 0.67% gain against a basket of major foreign currencies.

Cable slid 0.33% over the course of Friday’s trading. Weaker than expected retail sales figures from the U.K. sent Sterling tumbling against the Greenback. With FOMC’s press conference nearing, Cable faces strong downward pressure.

The Euro gained 0.3% against the Greenback on Friday. The Greenback’s across the board weakness allowed the Euro to recoup some of its intra-week losses.

Gold lost 0.26% on Friday but ended the week with a solid near 1% gain. The precious metal continues to embody positive sentiment as inflationary pressure around the world continue to rise.

Technical Analysis:

GBPUSD (Daily Chart)

GBP/USD broke out to fresh weekly lows on Friday and has continued to press lower as the US trading session has gotten underway, with sterling succumbing to weak data and risk-off flows that are weighing broadly on risk-sensitive currencies. Data released by the UK’s ONS on Friday showed that headline Retail Sales dropped 3.7% MoM, much larger than expectations for a 0.6% MoM decline. At current levels just above the 1.3550 mark, GBP/USD now trades about 0.3% lower on the day, taking on the week losses to about 0.9%.

On the technical front, with the latest drop having taken the pair back below the 20 DMA for the first time since this time last month, the sterling bulls will be concerned that GBP’s near-term momentum has turned negative. The main area of support for cable traders to now keep an eye on is at the 1.3500 level, as a breach of that level incicates that the pair get back to its past downtrend. The RSI for Cable dropped drastically, from its 60s to around the average line.

Resistance: 1.3733 (200 DMA), 1.3830, 1.3900

Support:  1.3600, 1.3400, 1.3200

EURUSD (Daily Chart)

The Euro pair is rising on Friday, and after the beginning of the American session, it peaked at 1.1361 and then pulled back. The US dollar is posting mixed results across the board, ahead of the weekend.

The upside lost momentum amid risk aversion. Equity prices in Wall Street are falling again, with the Dow Jones losing 1.30% and the Nasdaq 1.89%. The negative tone is boosting Treasuries. The 10-year yield stands at 1.762%, while the 30-year 2.076 both a one-week lows.

As to technical, the shared currency’s price action is back into the previous consolidation range seesawing around the 23.6% Fibonacci. The RSI indicator reads 49.54, showing no obvious traction from either side. If the pair manages to rise back above 38.2% Fibonacci the outlook would improve. On the downside, a solid break under 23.6% Fibonacci should clear the way to more losses and to a test of the bottom of the retracement lines.

Resistance: 1.1380, 1.1440,1.1500

Support: 1.1300, 1.1200

XAUUSD (Daily Chart)

Gold price slid a bit to the south during today’s trading, closing the week at $1,835 a troy ounce which is the second straight week ended in positive territory. The ongoing conflict between Russia and Ukraine, the People’s Bank of China’s efforts to loosen their policy amid worsening economic outlook and the steep drop seen in Wall Street are the main drivers for gold’s recent rally. However, on Wednesday, the Fed will announce its policy rate decision and release the Monetary Policy Statement following its two-day meeting. A decision to increase the reductions in monthly asset purchases or 50 bps rate hike in March or worse, both, could weigh hugely on the demand of the bright metal.

From the technical perspective, the RSI bias remain above the average line, after breaking the $1830 area on Wednesday. Since the next resistance lies $25 above the current price level, there’s still room for the gold’s traction. As previously mentioned, we expect the short-term uptrend to reach the critical $1,860 resistance, though the downside risk will gradually increase during its climb.

Resistance: 1860, 1900

Support: 1830, 1800, 1765

Economic Data:

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Market Focus

Wall Street’s major indexes continued their sharp losses on Thursday, especially evaporating late in the session as investors considered whether stocks were cheap after a sell-off at the start of the year and the Nasdaq slipped into correction territory. In addition, the S&P 500’s plummet was largely driven by a slump in consumer discretionary stocks and renewed weakness after tech stocks failed to hold onto their intraday gains for the second day in a row. At the end of the market, the Dow Jones Industrial Average fell 0.89% to 34,715.39 points, the S&P 500 index lost 1.10% to 4,482.73 and the Nasdaq Composite Index dropped 1.3% to 14,154.02 points

10 of the 11 major sectors in the S&P 500 ended lower, with the consumer discretionary sector down 1.9%, followed by the materials sector, down 1.43%, and the lone winner was utilities, which edged up 0.1%. Consumer discretionary stocks were led lower by Amazon, Garmin and VF Corporation, which lost 1.30%, 6.05% and 5.73%, respectively. On the other hand, the Dow’s worst intraday performances were Dow Inc. down 3.39%, Intel Corp down 2.95% and Home Depot down 2.81%.

Main Pairs Movement:

Disappointing U.S. jobs-related data weakened the dollar in U.S. session, with initial jobless claims unexpectedly jumping to 286K for the week ended Jan. 7, the highest level since late October. But then, as the three major indexes plummeted, the dollar index began to soar and reached around 96.

Sterling was down just 0.1% at the end of the day. A lack of specific data was released, but the pair gained 0.6% intraday as the greenback weakened, but then fell as the greenback strengthened. On Friday, core retail sales data and comments from BOE members may provide some direction on the way forward.

A similar situation occurred in the euro, which rose first and then fell against the dollar. Later in the day, ECB President Christine Lagarde is due to speak, but a rate hike remains less likely.

Gold settled little changed at around $1,840 an ounce but managed to hit a fresh two-month high of $1,847.92 an ounce. Meanwhile, crude prices surged to fresh multi-year highs, with WTI hitting $87.08 a barrel and Brent hitting $89.46 a barrel.

Technical Analysis:

GBPUSD (Daily Chart)

Cable made a mild slide in the Asian session but jumped fiercely at the start of the European trading hours and extended further to the north after the dismal US job data came out, which weighed heavily on the dollar’s demands. The pair now trades around 1.3645, posting 0.23% gains during the intraday trades. The rate competition between the hawkish Bank of England and the Federal Reserve will continue to be the main driver to Cable’s future price actions, as the Fed has announced its rate hike timetable that has been priced in by the market, we expect that GBP/USD to climb further once new BoE hawkish policies being announced. Investors are all eye on the February 3^rd BoE meeting.

On the technical front, the RSI for Cable remains around 60, and the pair settles above its 20 and 50 DMA, eyeing on the critical 200-day one. Cable lingers around the 1.3640-50 level at the moment. To the upside, if the pair break through its 200 DMA, the next resistance will be at 1.3830, then 1.3900; on the flip side, if the pair failed to cling on the 1.3600 level, the next effective support will appear at 1.3400, followed by 1.3200, where the one-year lows lie.

Resistance:  1.3734 (200 DMA), 1.3830, 1.3900

Support:  1.36600, 1.3400, 1.3200

EURUSD (Daily Chart)

The euro pair is holding the lower ground below 1.1350, as the US dollar attempts a bounce in tandem with the Treasury yields amid a risk-on mood. The sentiment on Wall Street improved quite a bit, in anticipation of the corporate earnings reports. That fueled a fresh sell-off in the US Treasuries, which in turn, prompted the yields to resume their uptrend. The upturn in the yields lifted the sentiment around the dollar at the euro’s expense. Escalating Russia-Ukraine crisis, with the US imposing sanctions on four Ukrainian officials, accusing them of destabilizing Ukraine, also boosts demand for the safe-haven US dollar.

As to technical, the EUR/USD pair’s price actions shifted to the south, heading to the next retracement line at around 1.1300. The RSI for the pair continues to fall, now reading 47.74, showing a stronger downside pressure weighing on Euro. As previously mentioned, the pair could fell over the 1.1300 support and then season lows around the 1.1200 support. The pair still capped by its 20 and 200 DMA, slight above the 50 DMA.

Resistance: 1.1380, 1.1440,1.1500

Support: 1.1300, 1.1200

XAUUSD (Daily Chart)

Gold price is trading almost unchanged on the day around $1,841 a troy ounce, as it fades its uptick from fresh two-month highs of $1,848. The latest leg down in gold price could be associated with a tepid bounce seen in the US Treasury yields, which helps put a fresh bid under the dollar. Additionally, a broad rebound across markets fuel risk-on flows, dulling gold’s appeal as a safe-haven. Despite the pullback, the yellow metal remains supported by soaring inflation globally and negative real returns, along with escalating geopolitical tensions surround US, Russia and Ukraine amid a probable invasion by the Kremlin of the latter.

From the technical perspective, the RSI bias continues to point to the upside, after breaking the $1830 area on Wednesday. Since the next resistance lies $20 above the current price level, there’s still room for the gold’s traction. As previously mentioned, we expect the short-term uptrend to reach the critical $1,860 resistance, though the downside risk will gradually increase during its climb.

Resistance: 1860, 1900

Support: 1830, 1800, 1765

Economic Data:

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Market Focus

The broad U.S. equity markets continued to fall on Wednesday’s trading. The Dow Jones industrial average lost 0.96% to close at 35,028.65, the S&P 500 lost 0.97% to close at 4532.76, and the Nasdaq composite lost 1.15% to close at 14,340.25. The benchmark U.S. 10 year treasury yield continues to edge higher and is currently sitting at 1.865%; meanwhile, the 30 year treasury yield inched higher, as well, and is currently at 2.169%.

With earnings seasons well underway, Bank of America and Morgan Stanley have both reported better than expected earnings results; however, the broad equity market is already bracing for the Fed’s imminent rate hike. Among the 11 sectors that make up the S&P 500, only consumer staples and utilities were able to post moderate gains.

Meanwhile, the cryptocurrency market suffered as well. Bitcoin has fallen back below 42,000, more than a 35% drop from its November, 2021 high. Ethereum lost 2.53% against the Dollar and is currently trading at 3114.36.

Main Pairs Movement:

The Dollar Index, which measures the Greenback against a basket of major foreign currencies, dropped 0.11% over the course of yesterday’s trading.

Cable gained 0.13% over the course of yesterday’s trading. Britain’s CPI data indicated the largest inflationary pressure in nearly 30 years. Market participants interpreted this information as a possible trigger for the BOE increase interest rates once again.

The Euro gained against the Dollar amid broad-based Dollar weakness. With interest rate divergence on the horizon, upward momentum for the Euro remains weak.

The precious metal, Gold, enjoyed a 1.48% gain against the Dollar over the course of yesterday’s trading. With inflation rising, globally, market participants have once again turn to the precious metal as a hedge against inflation.

Technical Analysis:

GBPUSD (Daily Chart)

Cable regained traction and rebounded on Wednesday, signaling an end of three-day retreat, triggered by a double rejection at 200 DMA (1.3736) last week. Sterling was boosted by UK CPI data which showed that inflation in Britain continued to rise and hit the highest level in nearly 30 years in December, hammering policymakers’ general view of transitory process and boosting hopes for another BoE’s rate hike on its February 3^rd meeting.

On the technical front, owing to the fundamental supports, the RSI indicator bounced back to 60, suggesting a recovery in the bulls’ strength. Cable has jumped above the 1.3600 resistance and is heading to the critical 200 DMA pressure level at the moment. A breakthrough of that level indicates that there’s more room for Pound to appreciate, eyeing on 1.3830.

Resistance: 1.3736 (200 DMA), 1.3830, 1.3900

Support:  1.3500, 1.3400, 1.3200

EURUSD (Daily Chart)

The EUR/USD pair is following its British peer’s rally with a modest 0.2% gain, which has barely regained about a quarter of its Tuesday’s decline. However, considering the weak outlook of the monetary policy divergences between the two central banks, and the risk of losses on Russia and Ukraine tensions, it is expected that the pair will eventually break under 1.1300 in the near term, and potentially post a fresh 2-year low as the Fed’s tightening cycle kicks off .

As to technical, the Euro pair doesn’t recover to the 38.2% Fibonacci during today’s trading, showing its intraday gains are nothing but a mild correction. The RSI for the pair marks 49.47, indicating the shared currency remain under selling pressure. To the downside, the pair could fell over the 1.1300 support and then season lows around the 1.1200 support. The pair still capped by its 20 and 200 DMA, slight above the 50 DMA.

Resistance: 1.1380, 1.1440,1.1500

Support: 1.1300, 1.1200

XAUUSD (Daily Chart)

Gold’s upside momentum has waned in recent trade, with prices trading in more of a subdued manner near $1842 after bursting above resistance in the $1830s for the first time in over two months. The speed of the pair’s latest advances, especially between the $1830 to $1840 area, is suggestive of a stop run, as many short traders may have had their stop loss sat somewhere in the $1830s. However, it is unlikely that spot gold can resist the advances of the US dollar and US real yields forever, and expectations for a very hawkish Fed in 2022 suggest continued upside risks for both.

From the technical perspective, though gold’s intraday hike, the pair’s mid-term bearish tractions are still above the price action. Gold price now trades above all its moving averages, and the RSI indicator reads 62.12, suggesting a bullish outlook. We expect the short-term uptrend to reach the critical $1,860 resistance, though the downside risk will get bigger and bigger during its climb.

Resistance: 1860, 1900

Support: 1830, 1800, 1765

Economic Data:

Market Focus

Wall Street’s main indexes fell sharply on Tuesday as soaring U.S. Treasury yields hit tech stocks in the U.S. and Europe, while losses at Goldman Sachs led to losses in U.S. financial stocks. U.S. 10-year yields now rose to a two-year high of 1.875%, while two-year yields also rose above 1%, as traders braced for the Federal Reserve to be more aggressive in tackling unabated inflation. At the end of the market, the Dow Jones Industrial Average slid 1.51% to 35,368.47 points, the S&P 500 index lost 1.84% to 4,577.11 and the Nasdaq Composite Index, slipped 2.6% to 14,506.9 points. On the other hand, European tech stocks were also under pressure and fell 2.2%, causing the pan-European STOXX 600 index to drop as much as 1.44% during the session before closing down 0.97%.

Of the 11 sectors in the S&P 500, 10 ended lower, information technology was the biggest loser, down 2.48%, followed by interest-rate-sensitive financials, down 2.27%. Energy, the biggest gainer so far in 2022, was the only sector in positive territory, up 0.4%. Large-cap stocks such as Microsoft, Apple and Meta fell 2.43%, 1.89% and 4.14% respectively, weighing on the information technology sector. In addition, the worst performance of the Dow Jones index was Goldman Sachs Group, which fell 6.97%, JPMorgan Chase fell 4.19%, and Cisco Systems fell 2.66%. The worst performers on the S&P 500 were Moderna Inc, down 8.85%, Applied Materials, down 8.77%, and KLA-Tencor Corporation, down 7.20%.

Main Pairs Movement:

The U.S. dollar is the overall winner compared to all its major competitors. U.S. Treasury yields surged to the milestones, with the 10-year yield at 1.856% and the 2-year yield over 1%. Stocks edged lower and global indices closed lower.

As Treasury yields continued to rise, the dollar was fueled. The Dollar Index moved on its winning streak, gaining 0.5% to end at 95.7.

Cable started to fall and dipped below 1.3600. The unemployment rate fell to 4.1% in the three months to November, while the number of unemployed fell by 43.3K in December. Meanwhile, a scandal over Downing Street parties has put Prime Minister Boris Johnson’s leadership at risk during Britain’s worst lockdown.

The same pattern scenario for EUR/USD, after reaching the 1.14500 level, the pair declined and is currently back in the consolidation zone. Despite Germany’s ZEW survey showing a sharp rebound in economic sentiment, it offered little help.

Technical Analysis:

GBPUSD (Daily Chart)

Cable headed to the south for the third consecutive day as the hawkish Fed rate hike timetable has been finally in effect. The GBP/USD pair traded sidelined during the Asian Pacific session, but then plummeted at the beginning of the European trading hours, and dropped further after the Wall Street opening as the US equities opened low. That’s said, the tightened US policies and the risk-off market mood boosted the greenback.

On the technical front, the RSI indicator reads 56.23 as of writing, retreated from yesterday’s 60s, suggesting a depletion in the bulls’ strength. Moreover, Cable has made several attempts to regain 1.3600 intraday but failed, indicating that a strong selling power is hovering around that critical resistance level, and making the pair’s comeback more difficult.

Resistance:  1.3600, 1.3736 (200 DMA), 1.3830

Support:  1.3500, 1.3400, 1.3200

EURUSD (Daily Chart)

The Euro pair’s price actions are similar to Cable ones, but as the ECB is more conservative in monetary policies, the shared currency is more vulnerable to unfavorable circumstances, such as the recent US dollar rally and equity crashes. The pair now hovers around 1.1330, seventy pips down during today’s trading with the negative tone intact.

As to technical, if the EUR/USD pair fails to recover over 38.2% Fibonacci, then it could remain under pressure, looking at the 1.1300 zone and then season lows around the 1.1200 support. The slide pushed the pair back below all its major moving averages and into the previous consolidation phase in December 2021.

Resistance: 1.1380, 1.1440,1.1500

Support: 1.1300, 1.1200

USDCAD (Daily Chart)

Loonie has had a subdued session on Tuesday, with the pair having dropped back to trading just above its 200-day moving average at the 1.2500 level after briefly surpassing the 1.2550 mark midway through US trade. Surging crude oil prices failed to push USD/CAD below support in the 1.2500 area, with the pair supported by a broad recovery in the US dollar as US government bond yields advanced to reflect new hawkish Fed tightening bets ahead of next week’s meeting.

From the technical perspective, the pair’s mid-term bearish tractions seems to be weakened a lot during January’s trading, indicating that the recent sharp pullback from the December high might soon be over. That said, repeated failures to find acceptance below the 1.2500 mark shows the unlikelihood to set off any further near-term depreciating move.

Resistance: 1.2550, 1.2630, 1.2700

Support: 1.2450, 1.2290

Economic Data: