The Week Ahead 📈 7th – 11th FEB

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The Week Ahead 📈 7th - 11th FEB

Hello, welcome to the Key To Markets preview of the Week Ahead.

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Contents

• Currency Pair Performance


• 10 Big Stories Last Week


• Chart of the Week


• Economic Calendar Highlights


• 5 Things to Watch this Week


• Technical Analysis: EUR/USD | GBP/USD | USD/JPY | AUD/USD | USD/CAD | Gold | Oil | S&P 500

Currency Pair Performance

5-day performance as of February 3, 2022. 17:00 GMT

Source: finviz.com

10 Big Stories Last Week

In case you missed it....

Dollar slides. The US dollar rolled back aggressively from multi-year highs, unwinding all its post-FOMC gains.

Stocks bounce. Dip-buyers helped send stocks higher after a torrid January.

RBA ends QE. The Reserve Bank of Australia ended quantitative easing and markets are pricing in an H2 rate hike.

BOE ends QE too. The Bank of England stopped its bond buying program and raised rates by 25 basis points, while 4 policymakers voted for a 50bp hike.

ECB Q4 rate hike. THe European Central Bank will 'recalibrate' its policy at the March meeting and end asset purchases by September.

OPEC+ steady. Oil producers agreed to continue raising output by 400,000 barrels per day in March

Record Euro inflation. The Eurozone saw inflation of 5.1% in January, the highest since the start of the euro 20 years ago.

Gold survives. After a brutal post-Fed reaction, gold clings to $1800 oz midpoint.

Facebook unliked. Shares of Meta Platforms (formerly Facebook) tanked over 20% after disappointing Q4 earnings, losing $200 billion in market cap.

Google stock split. Google will split each share into 20 new shares to cut the price and make them more accessible.

Chart of the Week

Source: TradingView @jasperlawler

A simple piece of technical analysis this week, looking back over a slightly longer-term timeframe. The US dollar spent most of 2021 trending higher (EUR/USD trending lower). Now it looks as though that downtrend may be coming to an end, or at least pausing. After what looks like a fakeout under 1.12, EUR has rallied back to its 2022 peak above 1.14, breaking the year-long downtrend line in the process.

Economic Calendar Highlights

Source: FX Street

5 Things to Watch This Week

1)     Dollar fakeout?

Building a possible outlook on top of our 'chart of the week' – it's possible that the US dollar has topped. How so? If markets have fully priced in Fed rate hikes, then it means the dollar is susceptible to profit-taking. At the same time, markets now need to price in rate hikes from other central banks including the ECB.

2)     US CPI

The biggest event on this week's much quiester economic calendar is the US January CPI data release. Forecasts are for another multi-decade high at 7.2%, up from 7.0% in December. A surprise miss might ease some pressure on the Fed to hike rates but because the central bank is already so behind the curve, it may not.

3)     UK GDP

The British pound has been a top FX riser this year, only outdone by the US dollar. In November the UK economy returned to its pre-pandemic size, marking a relatively quick recovery time of just under two years. Good UK data will bolster the chances of a third successive BOE rate hike.

4)     US earnings

Disney, Coca-Cola, Pfizer and Uber are among the top-flight US corporations reporting this week following a mixed-bag of results from big tech. January saw a massive outperformance of 'value' stocks and earnings will play a decisive role in whether that continues.

5)     European earnings

Earnings from Europe's biggest companies appear in bigger numbers this week. L’Oreal, Linde, Total SA and Siemens from the mainland and BP, Ocado, Philip Morris, AstraZeneca and BAT are among top UK companies reporting.

Technical Analysis

Here you can find analysis of the major asset classes including the major forex pairs, gold, oil, and the S&P 500.

EUR/USD (H4 Candlestick Chart)

EUR/USD made a false break under 1.12 and has since rallied strongly back inside its old trading range, eyeing a re-test of the 20022 peak at 1.148.

GBP/USD (H4 Candlestick Chart)

GBP/USD ended its 2-week decline by bottoming at 1.335 and has since jumped back over 1.36 and back over its 20-DMA.

USD/JPY (H4 Candlestick Chart)

USD/JPY bottomed neatly at the support we listed last week above 114 and rebounded 100 pips to 115, remaining inside its choppy range.

AUD/USD (H4 Candlestick Chart)

AUD/USD dropped to the big 0.70 level with a successful test of the major support before rallying strongly back to around the Jan 26 peak at 0.718.

USD/CAD (H4 Candlestick Chart)

USD/CAD topped at the 1.278 resistance we mentioned last week before rolling over to 1.265, which was tested multiplied times as neat term support.

Gold (H4 Candlestick Chart)

XAU/USD clung onto major support at 1780 despite the volatility of the drop from 1850 and is now trying to establish a base around 1800.

Brent Oil (H4 Candlestick Chart)

BRENT has closed over 90, breaking out of its tight short term range, possibly setting up a move to 93 then 95.

US 500 (D1 Candlestick Chart)

US500 broke out of its 4280-4440 range with a rally that came just shy of 4600, and is attempting to hold above the 20 DMA.

Thank you very much for reading - and have a great week trading!

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