Key highlights EUR/USD is eyeing an upside break above the 1.0700 resistance. A connecting bearish trend line is forming with resistance near 1.0710 on the 4-hours chart. EUR/USD technical analysis Looking at the 4-hours chart, the pair traded as low as 1.0481 and climbed higher. There was a move above the 1.0550 and 1.0600 resistance levels. The bulls were able to push the pair above the 50% Fib retracement level of the downward move from the 1.0713 swing high to 1.0481 low. The pair is now trading above the 1.0620 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours). On the upside, an initial resistance is near the 1.0700 level. There is also a connecting bearish trend line forming with resistance near 1.0710 on the on the same chart. The next major resistance may perhaps be near 1.0720. A clear move above the 1.0720 resistance might start a steady increase. In the stated case, EUR/USD might start a steady increase. In the stated case, the pair could rise towards the 1.0800 level. On the downside, there is a key support at 1.0620 and the 100 simple moving average (red, 4-hours). The main support is now forming near the 1.0550 level. A downside break below the 1.0550 zone might push the pair lower. The next major support sits near the 1.0500 level. Any more losses might open the doors for a move towards the 1.0450 support zone.

Markets The first week of 2023 came with the usual slew of major economic data points, which on net point to the curious post-pandemic era combination of a resilient labour market set against eroding business confidence across the US economy. And if this trend keeps up, it will likely make for a highly bumpy trading landscape in the months ahead, with investors getting yanked in multiple directions. Still, investors may continue to embrace weak data, especially if signs of descending wage inflation continue. Any indications in the data that the Fed could tap the brakes on its monetary tightening cycle could boost calls for a softer landing that may be optimal for equities. However, as inflation and rates volatility apex, growth and recession risk will likely be the principal risk factors in 2023. Against that backdrop, if central banks continue tightening, real rates may move higher, choking both corporate profits and the economy more forcefully Hence US equity risk premia are too low considering recession risks, uncertainty over the growth/inflation mix and relatively weak expected profit growth.  On the other side of the pond, traders generally remain bullish on STOXX 600 from a valuation perspective amid China tailwinds. Still, based on local economic updrafts, markets could refrain from doing a victory lap and turn cautious about taking too much comfort in the latest series of EU inflation prints which primarily reflected declines in energy prices or government price interventions, whereas core inflation firmed modestly. Not to mention the headline inflation decline is unlikely to stem ECB hawkishness. The focus will be on the start of the 4Q22 earnings season, which unofficially begins on Friday with results from America's biggest banks and other industry bellwethers, including JPM, BAC, C, and others, Turning back to macro, the focus is squarely on the December CPI reading on Thursday. Also,  keep an eye on the December NFIB Small Business survey and the November Consumer Credit Survey. US rates & the Dollar Mixed US economic data helped fuel a large rally in USTs last week. Both employment measures—nonfarm payrolls and the household survey—were robust, though average hourly earnings rose by less than expected, with October and November readings revised lower. By itself, the jobs report suggested a potential cooling of wage pressures without a significant increase in unemployment. From a market perspective, it supported further downshift at the front end of the curve on the idea that the Fed would be able to ease policy by more than previously priced. Both ISM surveys, however, were in contractionary territory, implying a defoliated outlook. While this also raises the possibility of more cuts priced in sooner, it would impart more of a bull steepening bias to the yield curve if realized and typically a strong signal to sell the US dollar.  The Fed still drives currency sentiment, however. The minutes of the December FOMC meeting released last week suggested that no FOMC member saw the need to cut rates this year, even alongside forecasts for a material increase in the unemployment rate. Admittedly, this was within the context of an inflation projection well above target. Still, it indicates a high bar to cutting rates this year absent a rapid inflation normalization. As such, the focus switches to Thursday's CPI report. Markets are currently split on whether the Fed will raise rates by 25bp or 50bp at the February Federal Open Market Committee meeting. Given the softer wage bias in the NFP  data, and if we get another cool core CPI print, we should have more folks pitching tents in the 25 bp camp and thus selling US dollars. And supporting the currency challenger side of the equation, ECB's hawkish rhetoric continues, pointing to further rate hikes over the first half of 2023 As the Fed downshifts amid the  ECB upshift, the EURO could be the next keep-it-simple trade  FX markets ride. Although arguably, the Yuan keep-it-simple trade has more room to run  Commodities Short-Term Pain Longer-Term Gain? The focus on China's "reopening" and relaxation of COVID-related restrictions has intensified in recent weeks. Although infection rates have risen sharply, hurting the near-term growth picture, optimism about the growth outlook beyond the very near term has been growing. Oil and Commodity markets have underperformed even as Chinese equities have risen sharply as current growth weakness in China may matter more for commodity assets than it does for equities. If that is the case, then the prospect of commodity (oil) upside should enhance as we approach the point where China's growth turns more meaningfully positive again. One possible explanation is that spot growth weakness is a higher hurdle for oil markets to clear as stocks can look more easily through recent weakness to price forward growth prospects.    -------------------------------   The weekend epiphany of shorts US Markets U.S. stocks traded notably...

2023 has arrived and it looks set to be another interesting year for financial markets. Diverging forces are at play leaving markets in a tug of war between different drivers. In bond markets lower inflation and recession points to lower yields, but on the other hand still strong labour markets and high wage pressures as well as the Chinese reopening, which is set to be an inflationary force, is pulling in the other direction. An easing of financial conditions also challenge central banks as tighter conditions are needed to cool down the economy further. Hence, we see a risk of more hikes (and fewer cuts in H2 and 2024) than markets currently price – especially in the US. We look for bond yields to be range bound for some time caught in the middle of the diverging forces. In equity markets lower inflation, somewhat better visibility than in 2023, the Chinese reopening as well as plenty of cash on the sideline are all positive forces that could reduce risk premia and underpin stocks. However, the outlook of recession, still hawkish central banks and profits under pressure still point to a more defensive stance. We believe stocks will end the year higher but see the short-term outlook being murky still. EM should benefit from the Chinese reopening as we have seen reflected in markets also lately. In the FX market we see more two-way action for the USD. The USD has weakened lately but we look for a rebound as the market prices too few Fed hikes and current account imbalances still favour the USD. We look for EUR/USD to go back to previous lows around 0.98 over coming quarters but it is unlikely to happen in a straight line. We see increasing signs that headline inflation has peaked. German inflation for December dropped to 8.6% y/y from 10.0% y/y while Spanish inflation declined to 5.8% y/y from 6.8% y/y. However, the drop in Germany was driven by a government-backed discount to the energy bill and core inflation was high in both countries. Oil and gas prices have moved lower this week adding downward pressure on goods inflation and transport services. However, a key concern for the ECB is still the tight labour market. In an interview last week, ECB President Christine Lagarde said that wages are probably rising faster than expected and limiting fast wage growth was key to reining in inflation. The Fed also struck a hawkish tone in the FOMC minutes from the December meeting and Fed member Neel Kaskhari (voter, hawk) said on Wednesday he sees rates move to 5.4% (market prices peak around 5%). Like ECB, the Fed also highlights a tight labour market as key for sustaining the tightening path. In addition, easing financial conditions is a concern for the Fed, see also Research US – Good news is bad news for the Fed, 4 January. China’ re-opening has led to a surge in Covid cases, but the wave looks set to peak within the next month. We look for a recovery starting in February/March, which will make China an inflationary force in the global economy again. Next week all eyes will be on the US CPI for December. Lower gasoline and food prices will likely weigh on the headline (0.0% m/m), but services will continue to support core (0.3% m/m). In the euro area, we will keep an eye on data for unemployment and ECB comments following the recent CPI prints. Download The Full Weekly Focus

That‘s what S&P 500 needs – and with my patient call of the upside resolution to the recent range being more probable. For all the excitement of making another great call, don‘t lose the big picture view. The not overly hot jobs figure allows for the Jan top to be made, with the first objective to be completed, being the upside break of 3,875. Note how well silver, copper, gold and oil are doing in the NFPs aftermath. I‘ll keep commenting the live price action on Twitter as: (…) The narrow window of opportunity to allow the market celebrate CPI while PPI continues raising its ugly head, is at hand. Keep enjoying the lively Twitter feed serving you all already in, which comes on top of getting the key daily analytics right into your mailbox. Plenty gets addressed there (or on Telegram if you prefer), but the analyses (whether short or long format, depending on market action) over email are the bedrock. So, make sure you‘re signed up for the free newsletter and that you have my Twitter profile open with notifications on so as not to miss a thing, and to benefit from extra intraday calls. Let‘s move right into the charts. S&P 500 and Nasdaq outlook 3,875 is likely to give today, and 3,895 – 3,910 zone awaits for Monday. Yes, be patient because stocks are running with a Fed tightening misperception – the central bank isn‘t backing off. Gold, Silver and miners Silver will again rise from here, it‘s a matter of very short time till $23.80 goes in the rear view mirror. Note also my yesterday‘s tweets about fine reversals in GDX and SIL. Crude Oil Crude oil, this laggard of 2023, is hesitantly starting to move as well, but don‘t expect miracles too soon or too fast. Still worth holding here for more upside though. As 2022 was the year of energy, and 2023 would belong to metals and agrifoods.

In this Trading Opportunities Webinar, Neerav Yadav (Author of "Think with the Markets") has discussed charts of Forex, Commodities, Indices. All discussions are based on Advanced Elliott Wave, with detailed Wave counts as well standard Supply and Demand analysis.

The dollar eased after US labor data on Friday, as US economy added 223K jobs in December, beating expectations for 200K increase, but wage growth slowed slightly (Dec 0.3% m/m vs 0.4% Nov / f/c) and unemployment fell to 3.5% from 3.6%, hitting pre-pandemic levels. The data suggest that the labor market remains tight, but also fuel expectations for softer approach by the central bank in its policy meeting in February, as bets for 25 basis points rate hike rose from 54% to 67%, while expectations for 0.5% raise dropped to 33%. Slightly calmer view of Fed’s hawkishness deflated the dollar index, which reversed the largest part of its Thursday’s rally, after bulls were trapped above daily Kijun-sen (105.10) that would add to negative impact from fundamentals. Daily studies show momentum indicator heading south and breaking into negative territory, which contributes to bearish signals. Fresh weakness looks for Friday’s close below daily Tenkan-sen (104.26) to further weaken near-term structure and keep recent multi-month lows at 103.12/06 (Dec 30/15) under increased pressure, with break lower to signal continuation of larger downtrend from 2022 high (114.72). Only firm break above daily Kijun-sen would bring bulls in play for fresh recovery. Res: 104.81; 105.10; 105.70; 106.24 Sup: 103.77; 103.38; 103.06; 102.11