Forex Signals Brief January 24: Manufacturing and Services PMI Close the Week, After Trump’s Davos Speech
The Speech from Donald Trump at Davos yesterday helped stocks and cryptos while weakening the USD and Oil, today we have the services and manufacturing PMI to close the week.
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During Trump’s visit to Davos, the US dollar initially rose but ultimately experienced a modest decline. Trump discussed the idea of funding tax cuts through universal tariffs, which initially boosted the dollar before it gradually weakened. On the EUR/USD chart, the price dipped below 1.04 before rebounding above this level again. His comments about potential interest rate cuts may have contributed to the dollar’s decline, though he lacks the authority to influence Fed policy directly.
Trump’s remarks regarding oil had a more pronounced impact on the market. He stated that he would ask Saudi Arabia and OPEC to lower oil prices, which led to a $1.40 drop in crude oil, bringing WTI to $74.20s. This movement occurred on top of a smaller-than-expected drawdown in US crude oil inventories, with the EIA reporting a decline of -1,017K barrels versus the anticipated -1,645K.
Trump’s speech in Davos focused on inspiring confidence and outlining his vision for US economic expansion. He suggested that lowering the corporate tax rate to 15% from the current 21% for businesses that manufacture their products domestically, would be a significant achievement. Meanwhile, the risk sentiment improved considerably and S&P 500 reached a new all-time high, surpassing the previous peak set in December. At the World Economic Forum, Trump reiterated his vision of a “golden age” and a “revolution of common sense,” emphasizing that the US aims to become the global leader in artificial intelligence and cryptocurrency.
His statements caused BITCOIN to surge nearly $6,000 from its $101,000 lows, further fueled by a tweet from Senator Lummis, a known Bitcoin advocate, who hinted at major upcoming developments. Trump also reinforced his protectionist stance, stating that products not manufactured in the US would face tariffs. He highlighted the country’s growing energy needs, asserting that AI plants could operate on various fuel sources, with coal serving as a backup.
Today’s Market Expectations
The Japanese Core CPI Y/Y is expected to come in at 3.0%, rising from the previous 2.7%. However, with the upcoming Bank of Japan (BoJ) decision taking center stage, market reaction to the inflation data might be limited. The BoJ is widely anticipated to raise interest rates by 25 basis points, a shift that gained traction over the past few weeks due to typical pre-decision “leaks,” including Governor Ueda’s comments suggesting that a rate hike was under serious consideration. As a result, markets have already positioned themselves for a potential hike, bidding up the Japanese yen in anticipation. This has raised the risk of disappointment if the BoJ decides to leave rates unchanged, potentially leading to a reversal in the yen’s recent strength.
Besides that, we have the Services and Manufacturing PMI reports from Europe and the US today. The manufacturing is expected to remain in recession while European activity in the services sector are expected to remain little changed just above stagnation. IN the US the service sector is expanding at an impressive pace and is expected to keep the momentum.
Yesterday the most markets were most of the day, with a spike in risk assets such as commodity currencies, and cryptocurrencies after Donald Trump’s speech in Davos. We opened 6 trading signals in total, ending the day with four winning forex signals and two losing ones.
Gold Climbs Above $2,700 Again
This month, gold (XAU/USD) has bounced back after finding solid support around the $2,600 level. Last month, prices attempted but failed to break through the key $2,725 resistance level, leading to a $100 drop. However, they stabilized near the 20-week SMA, where a doji candlestick signaled a potential bullish reversal. This was followed by three consecutive bullish weekly candles, pushing gold above $2,700 on Monday, with moving averages acting as support on the H4 chart below. Yesterday we saw a retreat early in the day, but the retreat stalled at the 20 SMA (gray) where we opened a buy Gold signal, which closed in profit after the bounce.
XAU/USD – H4 Chart
EUR/USD Faces the 50 Daily SMA After Climbing Above 1.04
The EUR/USD pair has been under persistent selling pressure since turning lower from levels above 1.11 in late September, declining nearly 10 cents. However, a notable bullish push on Monday was driven by a weakening US dollar. On the daily chart, the price climbed above the 20 SMA but struggled at the 50 daily SMA, briefly touching 1.2456 before retreating below it during the US trading session. However yesterday the price returned above this moving average after Trump’s speech in Davos.
EUR/USD – Daily Chart
Cryptocurrency Update
Bitcoin Consolidates Above $100K
Bitcoin (BTC/USD) has seen significant volatility in recent sessions. After starting the week near $108,000, it tumbled to the low $90,000s following a 25 basis point rate cut and eventually dipped below $100,000. A brief recovery to $95,000 met resistance at the 20-day SMA, leading to another decline. Despite this, Bitcoin rebounded by 10% and set a new all-time high on Monday before stabilizing around the $100,000 mark. Earlier this week, renewed buying interest helped Bitcoin maintain its bullish momentum, pushing it to fresh highs and consolidating above $100K.
BTC/USD – Daily chart
Ethereum Stuck between MAs
Ethereum (ETH/USD) has also experienced considerable price swings. Initially finding support near the 50-day SMA, selling pressure drove ETH below $3,500 and later $3,200. During Monday’s broader market sell-off, ETH briefly dipped below $3,000 before renewed buying spurred a rebound. Although Ethereum reached $4,000 midweek, it failed to hold those gains and slipped below $3,000 again. However, over the past two weeks, the overall strength in the cryptocurrency market has supported ETH’s recovery above $3,500, though the 20-day SMA rejected the price yesterday.
ETH/USD – Weekly Chart
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