EUR/USD trimmed a major part of the previous day’s gains to a fresh nine-month peak. Rising US bond yields underpin the USD and keep a lid on any further gains for the pair. The recent hawkish by ECB officials continue to lend support to the common currency. Traders now look to the flash PMI prints from the Eurozone and the US for some impetus. The EUR/USD pair touched its highest level since April on Monday, albeit struggled to find acceptance above the 1.0900 mark and finally settled with only modest intraday gains. The shared currency was underpinned by more hawkish comments by European Central Bank (ECB) officials, signalling additional jumbo interest rate hikes in coming months. In fact, ECB governing council member Klaas Knot said that interest rates would rise by 50 bps in both February and March and continue climbing in the months after. Furthermore, ECB President Christine Lagarde repeat the recent policy guidance and said that the central bank will keep raising interest rates quickly to slow inflation, which remains far too high. Adding to this, a fall in natural gas prices helped ease fears of a recession in Europe and offered additional support to the EUR/USD pair. That said, a modest US Dollar strength, bolstered by a further recovery in the US Treasury bond yields, kept a lid on any further gains for the major. The USD uptick, meanwhile, lacked bullish conviction amid growing acceptance that the Federal Reserve will soften its hawkish stance. In fact, the current market pricing indicates a greater chance of a smaller 25 bps Fed rate hike move in February. This, along with a generally positive tone around the equity markets, acts as a headwind for the safe-haven greenback and continues to extend some support to the major, at least for now. Despite the aforementioned supporting factors, the EUR/USD pair struggles to gain any traction and remains confined in a narrow trading band through the Asian session on Tuesday. Market participants now look forward to the release of the flash PMI prints from the Eurozone and the US for a fresh impetus. The immediate market reaction, however, is likely to remain limited as traders might prefer to wait on the sidelines ahead of the FOMC and the ECB monetary policy meetings next week. Nevertheless, rising bets for a less aggressive policy tightening by the Fed should keep the USD bulls on the defensive and support prospects for an extension of the recent appreciating move for the major. Technical Outlook From a technical perspective, momentum back above the 1.0900 mark might now confront some resistance near the overnight swing high, around the 1.0925 region. Some follow-through buying beyond the April 2022 peak, near the 1.0935 area, should allow bulls to reclaim the 1.1000 psychological mark. On the flip side, any corrective pullback is more likely to find decent support near the 200-hour SMA, currently around the 1.0830-1.0825 region. This is closely followed by the 1.0800 round figure, which should act as a pivotal point. A convincing break below should pave the way for a slide below the 1.0765 area, towards testing the next relevant support near the 1.0700 mark. Some follow-through selling will negate the positive outlook and shift the near-term bias in favour of bearish traders.

Stocks have rounded off the week with gains, and it is the tech sector that has seen the strongest gains, in a change to the norm for the year so far, says Chris Beauchamp, chief market analyst at online trading platform IG. Tech stocks lead the way higher “A faint echo of the post-pandemic glory days for tech stocks was heard this afternoon, as the Nasdaq 100 led the way higher for indices following well-received earnings from Netflix and job cuts at Google. This is a notable contrast to the recent past, where tech has usually been the leader in any downward move. But it is unlikely to be the beginning of a renaissance for the sector just yet, there is still too much to worry about for investors, and even the relative cheapness of the sector versus the halcyon days of pre-2020 have yet to provide a real attraction.” Layoffs risk pushing the US towards recession “Pre-earnings redundancies seem to be the fashion in the US right now, and have been received in positive fashion by markets keen to see signs of cost-cutting among companies. But it is a tricky tightrope to walk – a wave (or waves) of layoffs will hurt consumer confidence and spending, coming at a time when inflation and higher rates have already hit consumers’ wallets and boosting the chance of a more severe recession.”

Summary Weak Demand Continued to Depress Sales, but Improved Affordability Lessened the Blow Existing home sales declined for the 11th straight month, dropping 1.5% from November to December. This decline was shallower than expected and a softer drop than November, which was revised to a weaker 7.9% decline. The better-than-expected outcome for December still left existing home sales at a 4.02 million-unit annual pace, the lowest level since November 2010. Year-over-year, existing home sales were down 34.0%. While housing demand remains relatively depressed, lower mortgage rates and softer home price appreciation are likely starting to bring buyers off the sidelines. Mortgage rates started trending downward at the end of 2022 and averaged 6.36% in December. Rates have dropped even lower since then and averaged 6.15% during the week of January 19. The leg down in financing costs looks to have boosted mortgage demand. Mortgage applications for purchase jumped 24.7% in the second week of the year. The median single-family home price fell 1.6% in December to $372,700 on a not-seasonally adjusted basis. December marks the sixth straight month of falling home prices, declines that are partly influenced by seasonal factors but also driven by sellers adjusting prices lower to better align with lower buyer demand. The average days spent on the market has also inched up alongside weaker buyer demand. Average days on market increased to 26 days in December, up from 24 days in November and nearly double the 14-day average in the middle of 2022. Shaky market conditions continue to discourage homeowners from putting their homes on the market. Months' supply of single-family homes at the current sales pace declined to 2.9 months in December from 3.3 months in November. Inventory remains significantly below levels leading up to the housing bust, when months' supply peaked at just over 11 months. Condo and co-op sales experienced a sharper drop than single-family sales. Single-family sales fell 1.1% over the month, while condo and co-op sales declined by 4.5%. Existing home sales fell in every region except for the West, where sales were unchanged from November. Still, the West experienced the weakest growth in median home prices, which were up less than one percent over December 2021 levels. By contrast, home prices in the South have been more resilient, with median single-family home prices up 3.0% year-over-year in December. In December, sales fell 1.9% in the Northeast and 1.0% in the Midwest. While home prices in both regions are above their level a year ago, median single-family home prices declined 4.7% and 2.0% over the month, respectively.        

GBPUSD may lead to the formation of a global corrective trend – a triple zigzag w-x-y-x-z, in which the market builds the final actionary wave z of the cycle degree. The wave z most likely takes the form of a primary triple zigzag, in which we see the development of the primary wave. It may take the double zigzag pattern (W)-(X)-(Y). The formation of the intervening wave (X) has recently ended. There is a high probability that the last sub-wave (Y) will take the form of a zigzag A-B-C. The end of the first impulse wave A is expected at a minimum of 1.095. Alternatively, it is assumed that the cycle wave z could have been fully completed. Thus, we see that since the end of September, bulls have started to move the price up in a new trend. Perhaps we are seeing the development of a primary triple zigzag, where the first four parts are already formed. In the last section of the chart, the final actionary wave is formed. Most likely, it will be at 76.4% of wave and will end near 1.298.

Europe After yesterday’s little setback European markets have seen a modest rebound today, as we come to the end of what looks set to be a negative week for stock markets. Having seen such a strong start to the year there was always the probability that we’d see a little bit of profit taking, however that doesn’t mean that the early year optimism that has been the hallmark of this early year rebound is evaporating, and that we might start to see a sharp move lower. One bad day does not make a trend despite increasing evidence that the global economy is slowing down. On that basis we’re seeing a decent day for the FTSE250 with the likes of Boohoo and ASOS seeing decent gains after being upgraded to “buy” by Bank of America. We’re also seeing a strong end to the week for the likes of JD Sports, Burberry and Sports Direct owner, Frasers Group. The FTSE100 is lagging behind its European counterparts today, having found itself held back this week by weakness in some of its bigger cap components like Shell, Unilever and AstraZeneca.    SSE shares are higher after the energy utility provider revised its full year adjusted EPS expectations to more than 150p per share. They also said the business was on course to deliver in excess of a record £2.5bn in investment in its attempt to support the transition to net zero. The company said its Net Zero Acceleration plan of £12.5bn was continuing at pace. Planned output on renewables output fell short of expectations of 7,623 GWh, mainly due to unseasonably calm weather and delays to the Seagreen project. US US markets got off to a mixed start with the Dow lagging the S&P500 and Nasdaq 100, which is leading the way higher, despite another poor housing report for December, which saw a monthly decline of 1.5%, the 11th decline in a row, and marking a 34% drop year over year. While the Dow has lagged the Nasdaq 100 has pushed higher, although it’s unlikely to be enough to prevent another negative week. Tech outperformance has been driven by the announcement of job cuts across the sector.   Alphabet owner Google has become the latest tech giant to announce a series of job cuts today as it looks to reduce global headcount by 12,000, or 6% of its workforce. Today’s announcement follows on from Microsoft and Amazon earlier this week and probably won’t be the end of it if we see further economic weakness in the months ahead. Despite this unwelcome news all of these tech giants still have a headcount much higher than was the case pre-pandemic.   Online home goods retailer Wayfair has also announced it is cutting 1,750 jobs, and 10% of its workforce as it gears up for a weaker economy in 2023.   Netflix shares have also pushed higher after finishing their fiscal year on a high, adding 7.6m new subscribers in Q4, taking total subscriptions to 230.75m, while revenues also beat expectations at $7.85bn, and matching Q3. Profits on the other hand were lower than expected at $0.12c a share or $55m. With such a big increase in subscriber numbers its surprising that revenues weren’t higher, which suggests that a lot of these came from the lower priced ad tier. Revenue and profit guidance was also below expectations albeit higher than Q4 at $8.17bn and $2.82c a share. Co-CEO Reed Hastings also announced he was stepping down and was taking up the role of executive chairman. FX The pound initially slipped back a touch after December retail sales slid by 1.1%, a surprisingly poor outcome given the positive trading updates seen from a range of UK retailers so far this year. One of the more notable features of the data was that while sales volumes were predominantly lower, the amount of money being spent held up, reinforcing the fact that consumers are still spending money, but they are being more discriminating about how they spend it. Over the last 3 months volumes fell by -5.7%, however value saw a rise of 3.6% excluding fuel. Consumer confidence numbers for January also fell back sharply to -45 as people got a dose of the January blues, as they look to pay off any pre-Christmas spending. This morning’s numbers haven’t stopped the pound from having its strongest week against the US dollar since November, as it looks to push above the 1.2400 area. The Japanese yen has been the worst performer today after Japanese CPI came in at its highest levels in over 40 years at 4% and the Bank of Japan gave little indication that a change in monetary policy was imminent when it comes to its YCC policy, after Kuroda said that policy was likely to remain expansive for...

In today's live stream, Dale shared downside targets in Aussie. He's talking Gold Top, USDJPY Bottom and he maintains his bearish view in SPX.