Yesterday started quietly in the Asian session, following the FOMC the previous day, however, the USD resumed the upside momentum that it started after the FED meeting. In the European session, we had the inflation report from the Eurozone, which did show another slowdown, but not as much as was expected. Headline CPI was expected to fall from 3.4% to 3.2%, but came at 3.3% for January, while core CPI YoY was expected to fall from 2.9% to 2.7%, but it came at 2.8% instead.
That didn’t help EUR/USD much, which slipped below 1.08 again, however, it reversed higher late in the US session as the US regional banks continued to display similar symptoms to last year’s banking crisis. The KRE ETF of regional banks fell by around 7% as fears about the sector rekindled.
In Britain, the BOE kept rates unchanged at 5.25% as expected. The vote was mixed with 2 members voting to raise rates, one voting to lower rates and 6 wanting to keep rates unchanged, which is the first sign of upcoming rate cuts. During the press conference, Andrew Bailey, the Governor of the Bank of England (BOE), conveyed a message indicating that the central bank is not in a position to reduce interest rates at the current moment, emphasizing that the prevailing bank rate is deemed appropriate given the circumstances.
The US initial unemployment claims and quarterly employment cost data were released and revealed weakness, the dollar began to lose gains. Earlier, before the customary period for economic reports, the Challenger job cutbacks totaled -82K, marking the largest disclosed layoffs since March 2023. The ISM Manufacturing index came in better than predicted at 49.1 points vs. 47.0 expected, however, it remained below the breakeven level, indicating that the manufacturing activity is still contracting. Employment also came in lower at 47.1 points in the report, down from 48.1 in the previous one.
Today’s Market Expectations
Today the calendar is light in the Asian and European session, with only the French Industrial Production which is expected to show a .2% increase for January. In the US session, we have another employment report, the Non Farm Payrolls (NFP) which is the most important one as well.
The consensus forecast for the nonfarm payrolls is at 187k to be added to the US economy in January (range 140-285k), down from 216K in December, while the unemployment rate is expected to remain constant at 3.7%. Average hourly earnings are expected to rise by 0.3% month on month which is a decent pace, but it is a tick slower than the 0.4% increase observed in the previous month, while average workweek hours are expected to tick higher to 34.4 hours from 34.3 hours previously.
BTC/USD – Daily Chart
Ethereum Buyers Are Back
ETHEREUM has also been negative, falling from above $2,700 following the launch of BTC ETFs, while the overall trend remains positive because it has yet to reach lower lows. The price went below the 20 daily SMA (gray) yesterday, but it is still above the 50 SMA (yellow), which acts as the last support indication during deeper pullbacks like this one. We’re hoping to generate another long-term buy ETH signal near the 50 SMA, but we’ll see how the price movement plays out.
Ethereum – Daily Chart
- ETH Buy Signal
- Entry Price: $2,290
- Stop Loss: $2,590
- Take Profit: $1,750