FundYourFX Weekly Newsletter – Feb 5 – Feb 9, 2024

Welcome to the Weekly Market Update!

We are here to provide you with the pivotal financial happenings and insights. Our focus is on the primary stories of the week, alongside a deep dive into market dynamics, economic milestones, events to monitor, and technical forecasts. Here’s the essential roundup to keep you savvy and ready for strategic financial moves.

Top Stories of the Week

1. Federal Reserve Holds Rates Steady: The Federal Reserve keeps interest rates unchanged, with Chair Powell dismissing the likelihood of a March rate cut, propelling the US dollar to its highest in seven weeks.
2. Alphabet Shares Decline Despite Revenue Jump: Alphabet experiences a decrease in share value despite reporting a 13% increase in revenue, its fastest since early 2022, and earnings per share of $1.64, as Google’s advertising business falls short of expectations.
3. Bank of England Maintains Interest Rate: The BoE keeps its interest rate steady, with a more hawkish-than-anticipated vote outcome as two members favored a rate hike.
4. Microsoft Shares Dip After Earnings Triumph: Microsoft’s share price declines despite surpassing revenue expectations with an 18% increase and earnings per share of $2.93, amid warnings of escalating AI development costs.
5. Eurozone Inflation Decreases with Persistent Core Prices: Inflation in the Eurozone drops to 2.8% year-over-year in January, with core inflation remaining higher than anticipated at 3.3%, casting uncertainty on ECB rate cuts.
6. Bank of Japan Meeting Minutes Suggest Policy Tightening: The BoJ’s latest minutes indicate a shift towards a more hawkish policy, moving away from its long-standing ultra-loose monetary stance.
7. Australian Economic Slowdown Leads to Inflation Drop: Australia’s CPI falls to 0.6% quarter-over-quarter in Q4 as high-interest rates dampen economic activity, with retail sales dropping significantly and the AUD/USD approaching 0.65.
8. AMD Shares Tumble Post-Earnings: Despite outperforming revenue expectations and meeting profit forecasts, AMD’s stock price falls following a significant 137% rally over the previous year.
9. BNP Paribas Experiences Steep Decline After Earnings Miss: BNP Paribas’ shares drop 8% following a quarterly revenue shortfall and a downward adjustment in its profit forecast, marking its biggest daily loss since last March.

Market Analysis

• Tech Sector Fuels Major Index Gains: The S&P 500, Nasdaq, and Dow Jones Industrial Average saw substantial increases, driven by the tech industry’s strong results. Noteworthy earnings from Meta and Amazon lifted the market, mitigating worries about economic deceleration and inflation. This revival of tech stocks has restored investor optimism, underscoring the sector’s pivotal role in shaping market movements and investor outlook

Economic Highlights

• US Treasury Yields Adjust Amid Rate Cut Speculation: Recent adjustments in US Treasury yields, prompted by evolving expectations for Federal Reserve rate reductions, have led to a decrease in yields as markets reassess forecasts based on fresh economic insights and central bank cues. This shift underscores the intricate equilibrium investors must manage, balancing the potential impacts of monetary policy adjustments with broader economic signals and market dynamics.

Upcoming Events to Watch

1. US ISM Services PMI (This Week): Following the Federal Reserve’s recent interest rate decision and US non-farm payroll data, the spotlight turns to the ISM services PMI. This indicator will test if the US’s largest economic sector remains in expansion, potentially reinforcing the Federal Reserve’s stance against early rate cuts.
2. China CPI (Feb 8): On Thursday, China’s CPI figures for January are awaited, after a -0.3% decline in December hinted at ongoing deflation. These figures are crucial, as they may signal persistently weak demand within the world’s second-largest economy, influencing global economic recovery perspectives.
3. Eurozone Retail Sales (Feb 6): Set for release on Tuesday, these figures arrive amid high regional interest rates impacting consumer spending. With Germany already showing a 1.7% decrease in December’s retail sales, a weak report could prompt speculation on the ECB’s future rate adjustments.
4. RBA Rate Decision (Feb 6): The Reserve Bank of Australia is anticipated to maintain the interest rate at 4.35% on Tuesday. With recent data showing softer inflation and a drop in retail sales, market participants will keenly await any hints of a rate cut timeline.
5. Walt Disney Q1 Earnings (Feb 7): Disney is expected to announce its first-quarter earnings on Wednesday, with forecasts suggesting an EPS of $1.04 on $23.79 billion revenue. Amid its stock’s underperformance and a competitive streaming landscape, insights into Disney’s streaming services and Experiences segment will be pivotal.

Technical Analysis

We have analyzed the most popular trading pairs and assets, including EUR/USD, GBP/USD, Gold, and US500. Our aim is to provide you with an insightful analysis of their trends and support/resistance levels, which will help you make informed decisions.

EUR/USD

EUR/USD is currently in a sideways correction, trapped within a triangle formation on the daily chart, hinting at indecision after the lengthy Jan 2021 to Oct 2022 bearish period. In mid-July 2023, the pair tested the 61.8% Fibonacci resistance of the bear market but failed to break through, leading to a significant drop towards a support trendline from Sep 2022. Now, we’re seeing a bearish move with the price dropping below the 50-day SMA to 1.07933. Support is found at 1.0704 and 1.0502, while resistance is at 1.0916 and 1.1123. The RSI is at 36, indicating a growing bearish momentum.

GBP/USD

GBP/USD is hovering in a neutral territory, oscillating around 1.2648, below the 50-day SMA. This signals a consolidation phase with adjusted support levels at 1.2637 and 1.2375 and resistance steady at 1.2895. The RSI has fallen to 45, suggesting neutral momentum with a slight bearish inclination. The pair has been ranging, currently sitting at the lower end of its trading range.

XAU/USD

Gold’s short-term price direction is closely tied to upcoming economic data, USD fluctuations, and Fed rate cut forecasts. The metal is bullish, rallying to 2039.9. Support levels are adjusted to 2003.9 and 1941.1, with resistance at 2064.9 and 2144.8. The RSI, at 53, leans towards a neutral to slightly bullish momentumGold’s short-term price direction is closely tied to upcoming economic data, USD fluctuations, and Fed rate cut forecasts. The metal is bullish, rallying to 2039.9. Support levels are adjusted to 2003.9 and 1941.1, with resistance at 2064.9 and 2144.8. The RSI, at 53, leans towards a neutral to slightly bullish momentum.

XUS500

The S&P 500 Index retains its bullish stance but is experiencing a pullback, currently at 4858.0. Support has been recalibrated to 4754.6 and 4603.6, with resistance identified at 4932.9. An RSI of 59 signals strong, albeit not overbought, momentum, indicating potential for further gains.

Thank you for reading! Wishing you successful trades ahead!

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