USD Index Price Analysis: Further upside targets the 2023 high at 105.60


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The index adds to the ongoing rebound and approaches 104.00.
Gains could now accelerate to the 105.60 region in the near term.

The dollar’s march north remains unabated on Tuesday and encourages DXY to challenge the 55-day SMA near 103.80.

In the near term, further gains appear in the pipeline while above the 3-month support line near 101.90. That said, the next target of note now emerges at the 2023 peak at 105.63 recorded on January 6.

In the longer run, while below the 200-day SMA at 106.45, the outlook for the index remains negative.

DXY daily chart

 

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WTI Price Analysis: Recovery remains elusive below $75.40

WTI picks up bids to snap three-day downtrend at monthly low.
Bearish MACD signals, previous support line challenge buyers.
Upside appears doubtful below 100-DMA, descending trend line from August also challenges the Oil buyers.
Seven-week-old horizontal support limits immediate downside ahead of 2023 bottom.

WTI crude oil licks its wounds near the one-month low, picking up bids to $73.70 during early Monday morning in Europe. In doing so, the black gold bounces off seven-week-old horizontal support to print the first daily gains in four.

However, the bearish MACD signals join the previous support line from early December 2022 to challenge the WTI recovery. Adding strength to the bearish bias could be the metal’s sustained weakness below the 100-DMA.

Hence, the quote’s latest rebound remains doubtful unless it stays below the support-turned-resistance line, close to $75.40 at the latest. Following that, a run-up toward $78.50 can’t be ruled out.

Even so, the 100-DMA and a descending trend line from late August 2022, respectively near $81.00 and $85.00, could challenge the energy bulls before giving them control.

On the contrary, pullback moves may retest the horizontal area comprising multiple levels marked since mid-December, near $73.40.

In a case where the black gold remains bearish past $73.40, its decline to the year 2023 bottom of $70.27 and then to the $70.00 psychological magnet can’t be ruled out.

Overall, WTI remains on the bear’s radar despite the latest corrective pullback.

WTI: Daily chart

Trend: Further downside expected

 

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USD/CHF Price Analysis: Rallies back above 0.9250 reclaim the 20-DMA as bull’s eye the 50-DMA

The US Dollar strengthens across the FX space, a tailwind for the USD/CHF.
USD/CHF Price Analysis: Shifted to neutral biased once buyers hurdle the 20-DMA.

The USD/CHF is surging sharply during  Friday’s North American session, as Wall Street is set to finish the last trading day of the week with losses. Therefore, the USD/CHF is trading at 0.9260, above its opening price by 1.42%.

USD/CHF Price Analysis: Technical outlook

On Friday, the USD/CHF rally broke two downslope resistance trendlines, which would pave the way for further losses. In addition, the 20-day Exponential Moving Average (EMA) at 0.9210 was reclaimed during the uptrend, exposing crucial resistance levels, which, once cleared it, could pave the way for further gains.

The USD/CHF first resistance will be the January 31 daily high at 0.9288. A breach of the latter and the 0.9307, the 50-day EMA is up for grabs., followed by January’s 12 high at 0.9360.

On the flip side, the USD/CHF first support would be the 20-day EMA at 0.9210. Bears reclaiming the latter would exacerbate a fall below 0.9200, followed by the February 3 daily low at 0.9112.

USD/CHF Key Technical Levels

 

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US: Despite the rebound, the breadth of services expansion has still slowed – Wells Fargo

The ISM Service PMI released on Friday showed the index rose back above 50, into expansion territory. Analysts at Wells Fargo, point out that after just a single month under 50, the services ISM shot back up into expansion. However, they warn the breadth of services expansion has still slowed.

Key quotes:

“The slowdown in services activity to end last year now looks more like a blip rather than the start of a lasting slowdown in the sector. That’s at least according to the latest ISM services release, which revealed the index advanced 6.0 points to 55.2 after a temporary drop below 50 in December.”

“While we find it easy to talk away some of the weakness in this report, month-to-month movements in the ISM can be volatile and the breadth of expansion has eased.”

“Most components of the ISM improved, with the measure of business activity up 6.9 points to 60.4 and new orders matching that index level leaping 15.2 points after registering contraction in December. New orders now match the highest level registered over the past 12 months, an indication that activity continues to hold up in the services sector.”

“The easing of supply problems is also somewhat benefiting price pressure. At 67.8 the prices paid index remains firmly in expansion, but it has declined the past four consecutive months.”

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TESLA ($TSLA) impulsive rally favors upside [Video]

TESLA (TSLA) showing short term  Elliott wave  impulsive sequence started from 1/06/2023 low. It should remain supported in 3, 7 or 11 swings and extend higher. Short term, it placed ((iv)) correction at 162.78 low against 1/19/2023 low and favors upside in ((v)) of 3 of (3). It proposed ended weekly correction at 101.20 low at weekly blue box area and favors higher or at least can see larger 3 swing larger bounce. It placed (1) at 123.52 high and (2) at 114.92 low. Above there, it favors higher in extended wave (3) and expect further strength to continue. Within (3), it placed 1 at 125.95 high and 2 at 115.64 low. Currently, it favors higher in extended wave 3 of (3) and expect one more leg higher in ((v)) to finish wave 3.

In wave 3, it favored ended ((i)) at 137.50 high and ((ii)) at 124.31 low as 0.618  Fibonacci retracement  against ((i)). Above there, it extends higher in wave ((iii)), which ended at 180.68 high as 2.618 Fibonacci extension of wave ((i)). It proposed ended ((iv)) at 162.78 low in 3 swing pullback. It placed (a) at 166 low, (b) at 178.05 high and finally ended (c) of ((iv)) at 162.78 low. While above there, it favors higher in ((v)) to finish wave 3 of (3). It placed (i) of ((v)) at 174.30 high and expect short term pullback in (ii), which should remain above ((iv)) low to resume upside in (iii) of ((v)). It confirms the sequence above ((iii)) high. Short term, it should be remains supported in 3, 7 or 11 swings to see further upside.

TSLA 1-hour Elliott Wave chart

TSLA Elliott Wave video

 

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Biden administration plans to end emergency declarations on covid-19 on May 11

Early Tuesday morning in Asia, an Associated Press (AP) reporter quotes the White House statement suggesting that US President Joe Biden will end COVID-19 emergency declarations in the United States on May 11.

The news also mentions US President Biden’s pledge to use the veto if congress passes a bill to eliminate Covid vaccine mandate on healthcare providers working on certain federal programs.

On the previous day, China’s Center for Disease Control and Prevention (CDC) said, reported by Reuters, “China’s current wave of COVID-19 infections is nearing an end, and there was no significant rebound in cases during the Lunar New Year holiday.”

Also read: China CDC: Current wave of COVID infections nearing an end

AUD/USD remains pressured

Despite the upbeat news, the risk-barometer AUD/USD pair remains depressed around 0.7050, down for the third consecutive day, as traders await Aussie Retail Sales for December and China’s official activity data for January.

Also read: AUD/USD finds intermediate support around 0.7050, risk-off mood still intact

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EUR/USD holds at around 1.0860s as traders brace for the Fed and ECB’s decisions

The US core PCE, the Fed’s preferred gauge for inflation, edges down, sparking speculations for a Fed pivot.
Consumer Sentiment improved, while inflation expectations ticked lower.
EUR/USD Price Analysis: Upward biased, but short-term neutral, ahead of Fed and ECB’s decisions.

The EUR/USD got rejected from the 1.0900 psychological barrier for two consecutive days and on Friday slipped to the 1.0860 region after data from the United States (US) cemented the case for a 25 bps rate hike by the Fed. At the time of writing, the EUR/USD is trading at 1.0866.

Soft US core PCE increased the likelihood of the Fed lifting 25 bps

Wall Street finished the week with gains, shrugging off worries about an impending recession in the United States. Thursday’s data cemented the case for a robust economy, with Q4’s expanding by 2.9% QoQ above estimates of 2.6%, while Q3 remained at 3.2%. That sparked conversations of a possible “soft landing” by the US Federal Reserve.

In the meantime, Friday’s data revealed that inflation is cooling down, probably at a faster pace than estimated. The Fed’s favorite inflation gauge, the core Personal Consumption Expenditure (PCE) was aligned with estimates of 4.4% YoY, but below November’s 4.7%. That augmented speculations around the Fed would slash the size of rate hikes, as December marked the first lift in rates not being at 75 bps. Instead, Powell and Co. went for a 50 bps as it was appropriate, as mentioned by them while emphasizing that the pace was not as important as the peak of rates.

As Friday’s session ends, the CME FedWatchTool shows that odds for a Fed’s 25 bps rate hike stand at 99.2%, and traders are foreseeing the Federal Funds rate (FFR) to peak at around 5%, by March’s meeting.

In another tranche of data, a poll from the University of Michigan reported the US Consumer Sentiment, which improved vs. the preliminary reading of 64.6 to 64.9. Data revealed that inflation expectations for 1-year are estimated at 3.9%, lower than the previous poll, while for a 5-year, they stood at 2.9%.

Across the pond, European Central Bank (ECB) officials had reiterated they would raise rates at the upcoming meeting on February 2. ECB’s President Christine Lagarde said that the bank would “stay the course” with a 50 bps rate hike in January and the next meeting after that, albeit inflation in the Eurozone slid to 9.2%.

That said, the stage is set with the Fed lifting rates to 4.50-4.75% and the ECB to 2.50%, which would reduce the spread between the US and the Eurozone. Hence, the EUR/USD could resume its upward bias and test 1.1000 unless an unpleasant dovish surprise by Lagarde caps the rally and tumbles the EUR/USD.

EUR/USD Technical Analysis

Ahead into the next week, the EUR/USD remains upward biased. The pullback in the last couple of days could be attributed to the 1.0900 mark probing to be difficult resistance to hurdle. Also, the monetary policy decisions of the ECB and the Fed were an excuse for traders to close their positions.

Even though the EUR/USD is pressured, the price action from Thursday and Friday formed a series of successive candlesticks with a long bottom wick, suggesting that some buying pressure is resting. Nevertheless, the commitment o hold EUR/USD long positions throughout the weekend, and with uncertainty in the financial markets, kept the EUR/USD shy of reclaiming 1.0900.

A breach of the latter would expose the 1.1000 mark. As an alternate scenario, the EUR/USD diving below 1.0835, the weekly low, and the pair would dip toward the 20-day Exponential Moving Average (EMA) at 1.0788.

 

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ECB: 50bp hike next week has been well-communicated, focus will be on the path thereafter – Rabobank

The Federal Reserve, the Bank of England and the European Central Bank (ECB) will have their policy meetings next week. Market participants expect a 50 basis points rate hikes and to signal it will continue raising rates. Analysts at Rabobank, point out that a 50bp rate hike is all but a given for next week. They still expect the ECB can scale back to 25bp hikes from March, but the stronger outlook and wage pressures could delay this and pose upside risks.

Hawks still have an upper hand, but are no longer getting carte blanche

“The ECB’s hawks are still in a strong position, but they no longer have carte blanche with initial signs of easing inflation. The 50bp hike at next week’s meeting has been well-communicated, so focus will be on the path thereafter. This message will be more difficult, with Lagarde’s latest verbal intervention at odds with the ECB’s discontinuation of forward guidance, in favour of a meeting-by-meeting approach. Finally, we don’t expect the parameters of quantitative tightening to be very brow-raising, but supranational debt could get a favourable treatment.”

“The ECB has already announced that quantitative tightening will start at a pace of €15 billion per month, and that this will not involve active sales. We don’t expect the ECB to favour any of the APP programmes or any of the sovereign issuers when it comes to redemptions.”

 

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US Treasury Sec. Yellen: Overall good feeling that inflation is coming down

US Treasury Secretary Janet Yellen said on Monday that overall, she has a “good feeling that inflation is coming down.”

“US labor market is still very tight,” Yellen added.

Market reaction

The US Dollar Index remains vulnerable below 102.00 on the above comments. The spot is trading at 101.75, down 0.26% so far.

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