Fed’s interest rate decision ahead

The USD was stable yet tended to edge a bit lower against its counterparts on Friday, possibly under pressure by the wider deceleration of the Core PCE price index for January, in another sign that inflationary pressures in the US economy are easing. In the current week USD traders are expected to keep a close eye on the release of the Fed’s interest rate decision and the US employment report for January.

EUR/USD maintained a sideways motion just below the 1.0890 (R1) resistance line maybe with some slight bearish tendencies. We tend to maintain our bias for the sideways motion to continue, yet at the same time also note that the RSI indicator remains between the reading of 50 and 30 implying a residue of a bearish sentiment in the market and if it intensifies may drag the pair lower. In case a full selling interest is expressed by the market, we may see EUR/USD breaking the 1.0740 (S1) support line and aim for the 1.0740 (S2) support level. On the flip side, should the pair find extensive buying orders along its path we may see EUR/USD breaking the 1.0890 (R1) resistance line and aim for the 1.1010 (R2) resistance nest. 

US stock markets sent some mixed signals on Friday with attention also being placed on the earnings releases. we note that on Tuesday we get the earnings reports of Pfizer (#PFE), Microsoft (#MSFT), and Google (#GOOG)  on Wednesday Boeing (#BA), on Thursday Meta (#FB), Amazon (#AMZN) and Apple (#AAPL).

S&P 500 remained relatively unchanged on Friday failing to near the 4950 (R1) resistance line. We tend to maintain a bullish outlook for the index as long as the upward trendline incepted since the 11^th of January remains intact. Yet we note that the RSI indicator runs along the reading of 70, implying a strong bullish sentiment in the market for the index yet at the same time may be implying that he index has reached overbought levels and is ripe for a correction lower. Should the bulls maintain control over the pair, we may see the index breaking the 4950 (R1) resistance line with the next possible target for the bulls being set at the 5100 (R2) resistance level. Should the bears take over, we may see the price action of S&P 500 breaking initially the prementioned upward trendline, in a first signal that the upward motion has been interrupted and continue lower to break the 4800 (S1) support line and take aim of the 4660 (S2) support base.   

Other highlights for the day:

In an easy-going Monday, we note in the European session, Sweden’s preliminary GDP rate for Q4 and retail sales for December, while on a monetary level, we note that ECB Vice President De Guindos is scheduled to speak. In the Asian session tomorrow, we note the release of Australia’s retail sales growth rate for December. 

As for the rest of the week:

On Tuesday we get Q4’s preliminary GDP rates of France, the Czech Republic, Germany and the Eurozone, and Switzerland’s KOF indicator, Eurozone’s economic sentiment for January and from the US the December JOLTS Job Openings. On Wednesday we begin with the release of Japan’s industrial output for December, Australia’s CPI rates for Q4, Chinas’ NBS manufacturing PMI figure for January, UK’s nationwide house prices for January, France’s and Germany’s preliminary HICP rates for January, the US ADP national employment figure for January and Canada’s GDP rates for November and we highlight the release of the Fed’s interest rate decision. On Thursday we note the release of Australia’s building approvals for December, China’s Caixin manufacturing PMI figure for January, Eurozone’s preliminary HICP rates for January, the US weekly initial jobless claims figure, Canada’s manufacturing PMI figure for January and the US ISM Manufacturing PMI figure for January and on a monetary level, we note the interest rate decisions of BoE and Riksbank. On Friday we highlight the release from the US of the employment report for January and the factory’s orders for December and the final UoM consumer sentiment for January.

EUR/USD H4 Chart

Support: 1.0740 (S1), 1.0615 (S2), 1.0455 (S3)

Resistance: 1.0890 (R1), 1.1010 (R2), 1.1135 (R3)

S&P 500 Daily Chart

Support: 4800 (S1), 4660 (S2), 4540 (S3)

Resistance: 4950 (R1), 5100 (R2), 5250 (R3)

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