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The USD index gained yesterday reflecting the strengthening of the USD against some of its counterparts yesterday. The market’s expectations that the Fed will pursue a more aggressive, hawkish stance for its monetary policy are present and could intensify as the Fed’s interest rate release is nearing on Wednesday. Market sentiment seems to be providing some support for the USD, yet US stockmarkets seem to remain in a sell off mode, despite the rout and blazing recovery exercised yesterday.
Today we note the release of the US consumer confidence for January and the indicator’s reading is expected to drop and if so, could weaken the USD as it would imply that the average US consumer is characterized by less optimism about the US economy. On a fundamental level the standoff over Ukraine coupled with pressure on growth stocks ahead of the Federal Reserve’s imminent rate lift off seems to have investors firmly in risk-off mode.
Nasdaq recovered after a steep sell off yesterday yet the bearish tendencies continued to guide as its price action broke the 14385 (R1) support line now turned to resistance. We tend to maintain a bearish outlook for the index as long as it remains below the downward trendline incepted since the 13th of January. Should the bears actually remain in charge of the index’s direction, we may see it breaking the 14080 (S1) support line and aim for the 13710 (S2) level. Should a buying interest be displayed by the market, we may see the index reversing course breaking the prementioned downward trendline, the 14385 (R1) resistance line and aim for the 14730 (R2) resistance level.
EUR traders eye Germany’s Ifo indicators
The EUR seems to have benefitted temporarily against the USD from the unexpected rise of Germany’s preliminary manufacturing PMI reading for January. Today we note the release of Germany’s Ifo indicators for January. The current conditions indicator is expected to drop slightly reflecting a deterioration while the expectations indicator is expected to rise implying that the outlook for the German economy is improving. Should the actual figures meet their respective forecasts, we may see the EUR weakening as the overall climate seems to lack progress.
On the monetary level, we must note that ECB President Lagarde reiterated the bank’s expectations for inflationary pressures to retreat within the year, which may imply that the priorities of the bank remain in the growth sector of Eurozone’s economy and not inflationary pressures. As for EUR’s fundamentals we note that attention is in the Ukraine and the tensions with Russia. Efforts for a possible de-escalation of the tensions seem to have failed and if escalations heighten further, we may see them weighing on the economic outlook of the area thus, weakening the EUR.
EUR/USD bounced on the 1.1300 (S1) support line yesterday, yet some bearish tendencies seem to continue. We would switch our sideways bias for the pair in favor of a bearish outlook should the pair actually break below the 1.1300 (S1) and continue to mark lower troughs and lower highs. Please note that the RSI indicator below our 4-hour chart is below the reading of 50 also implying an advantage for the bears. Should the bears actually take over we may see the pair breaking the 1.1300 (S1) and take aim for the 1.1235 (S2) support level. Should the bulls take over, we may see the pair reversing course and breaking the 1.1370 (R1) resistance in search of higher grounds.
Other highlights for today
Besides the prementioned releases we also note the release of UK’s January CBI industrial orders trends and from the US the weekly API crude oil inventories figure as well as New Zealand’s December trade data. Also note that the during the Asian session tomorrow BoJ is to release summary of opinions from board members at its Jan. 17-18 policy meeting.
USD 100 Cash Daily Chart
Support: 14080 (S1), 13710 (S2), 13460 (S3)
Resistance: 14385 (R1), 14370 (R2), 15180 (R3)
EUR/USD H4 Chart
Support: 1.1300 (S1), 1.1235 (S2), 1.1180 (S3)
Resistance: 1.1370 (R1), 1.1435 (R2), 1.1510 (R3)
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JA 
