Forex

The US dollar declined in late January despite better-than-expected PMI figures. Still, the tide may shift in its favor in the coming days, especially if major US economic data keeps surprising traders on the positive.

According to estimates, economic activity increased by 2% annually in the last quarter, following a 4.9% gain in the third quarter. Although GDP is a backward-looking indicator, it can provide useful information about economic health. As a result, traders should closely monitor the data, focusing on household spending, which is the primary driver of growth.

USD/JPY managed to hold above the 100-day SMA, near 147.40. Prices may stabilize in this zone over the next few days before resuming the upside rally. However, if a collapse occurs, the potential of pullback toward the 146.00 level cannot be ruled out.



On the other hand, if the bulls recover control and push USD/JPY higher, the price might encounter a technical resistance at 149.00. With more vigor, traders will keep their eyes on the psychological barrier at 150.00.

EUR/USD rallied on January 24th, breaking through the 200-day simple moving average and reaching the 1.0900 level. If the gain extends further in the upcoming month, technical resistance will arise at 1.0920 and 1.0975. The crosshairs for increased strength will be 1.1020. On the other hand, if sentiment turns back in favor of selling and the pair falls, the 200-day SMA near 1.0840 will represent a solid support level.

GBP/USD failed to break through the critical barrier at 1.2770. Traders should closely monitor this technical level in the coming trading days to determine if it holds the bulls. A further loss from this position may turn the emphasis to 1.2600.

On the contrary, if the cable continues to advance and reaches 1.2770, we will have a bullish signal based on the fresh symmetrical triangle that has been developing since mid-January. In this scenario, GBP/USD may initially rally to 1.2830 before initiating a second bullish wave targeting 1.3000.

The Australian dollar is trading at about 0.6570 on Thursday. The 14-day EMA is 0.6617, and the psychological level is 0.6600. The AUD/USD pair may advance toward the critical level at 0.6650 with a clear move over this resistance zone.

If the pair moves lower, it may retest the weekly bottom at 0.6551, which is also the important mark at 0.6550. Should this support be broken, additional downward pressure may be on the pair, leading to a retesting of the monthly low near 0.6524.

Commodities

Crude oil rises due to a strong closure above the 50-day moving average of $73.67. Now, attention is focused on the 200 MA. Sellers may intervene at this level during the first test. A break over this and a push through the resistance level of $77.43 could spur additional upward movement.

It will be important to see how the 200-day MA reacts, as this could either confirm the present upward trend or open the door for a more robust bullish movement.

The price of gold had been changing throughout January, reversing some of the significant losses of the previous night to the $2,011 region, or a multi-day low; however, the increase is not very convincingly bullish.

From a technical standpoint, bearish traders are favored by the recent string of failures around the $2,040 to $2,042 resistant zone with the overnight decline. Furthermore, oscillators in the daily chart are now beginning to show negative trends, which supports the bearish picture for the price of gold.

Nevertheless, it will still be wise to hold off on positioning over a correction toward the support near $1,988 in order to reach the 200-day SMA, which is located close to the $1,964–$1,963 region, and the 100 SMA, which is currently centered around the $1,975–$1,974 area.

Indices

The US 30 index is beginning to moderate from its all-time high of 38,108 and is once again approaching the 37,800 mark, which served as significant resistance during the previous month, which is the 161.8% Fibonacci level of the decline from 35,685 to 32,320.

The oscillators are suggesting a negative correction technically. The MACD dropped below its positive trigger line, and the RSI is returning from the 70 level. The stochastic oscillator produced a bearish crossover between its %K and %D lines in the overbought region.

The trend pattern on the Nasdaq's daily chart is bullish, with classic moving averages expanding to indicate increased bullish momentum over multiple timeframes.

We're not witnessing a volume drop throughout January, so the rally may still have legs. Although the RSI is overbought again, there is a minor bearish divergence. Perhaps the most concerning sign is the recent daily candle, which gapped higher at the outset but failed to sustain gains beyond 17,500 before closing below the open price, plotting a shooting star.

Market Events

The US ISM Manufacturing PMI reported 47.40 on 3rd January, up from 46.70 this past month but down from 48.40 the previous year. However, USD JOLTS Job Openings were 8.79M, 0.06 million lower than last December (8.85M).

On 4th January, the US Automatic Data Processing, Inc. reported a 63K rise in ADP Non-Farm Employment Change compared to the data from the previous month, which was 101K. The Core CPI remained unchanged (0.3%).

According to the Office for National Statistics, the UK GDP was 0.3% lower than December 2023's (0.2%) announced on January 12. The Claimant Count Change was significantly higher (11.7K) than the previous month's 0.6K.

US Advanced GDP was reported as 3.3% on 25th January, 1.3% higher than expected but 1.6% lower than the last December 2023.