In the past couple of weeks, prices in the market were driven by expectations that the US Federal Reserve would raise interest rates by 25 basis points at a meeting on February 1 and then would be prepared to adjust the stance of monetary policy. Those assumptions are seen as the main reason behind a weaker dollar.

However, that was only until yesterday. In the course of the European session and even for some time after the opening of the North American session, the euro and the pound both extended the uptrend despite inflation results in the UK and the eurozone. Consumer prices slowed down, which means the Bank of England and the European Central Bank may soon reduce the pace of tightening and gradually start cutting interest rates with time.

However, everything changed when St. Louis FRB President James Bullard said the US central bank should stay aggressive. He believes there is no guarantee that consumer prices will keep on falling. Moreover, inflation is still high. In other words, the regulator may lift interest rates by 50 basis points at the coming meeting. Clearly, investors had to review their bets and forecasts. As a result, the greenback went up in price.

All eyes are now on what might be the Federal Reserve’s future stance on monetary policy. Any macro data simply lost its weight. Although it came slightly better than forecasts in the United States.

Retail Sales in the United States increased by 6%, beating market expectations of a fall to 5.0%. Given that consumer spending is the main driving force for economic growth, we may assume that the US may avoid a recession.

At the same time, industrial production growth slowed to 1.6% instead of 1.8%, decreasing more than expected. Moreover, the previous reading was downwardly revised to 2.2% from 2.5%. All in all, the decline in industrial production offset positive results for retail sales.

Today, the US will see the release of jobless claims data. However, those figures will unlikely somehow affect the market. Anyway, initial and continuing claims are forecast to rise by 2,000 and 6,000 respectively. Such an insignificant increase will hardly be of interest to investors. Rather, they will keep focusing on future interest rates. Given that the situation has changed, the greenback is likely to strengthen.


The EUR/USD pair is still moving sideways in the range of 1.0800/1.0870.
Price fluctuations within the range indicate an accumulation stage, which may trigger new price swings later.
If the quote consolidates above 1.0880 in the 4-hour time frame, the uptrend will continue. A bearish correction will occur if the pair settles below 1.0770 in the 4-hour time frame.


Moving sideways, the GBP/USD pair was able to break through resistance at 1.2300. The uptrend then accelerated. The pair approached the December high but pulled back, which shows a decrease in buying volumes. The quote then returned to 1.2300.
If the price falls below 1.2250 in the 4-hour time frame, a correction may occur and the quote may head toward 1.2150.
However, should the price settle above 1.2300, buying volumes would increase. In such a case, the pair may update its swing high.

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00:00 INTRO
00:26 European session
00:58 Fed Interest Rate
01:47 UNITED STATES RETAIL SALES, YOY
02:06 UNITED STATES INDUSTRIAL PRODUCTION, YOY
02:29 Jobless Claims Data
03:04 EUR/USD
03:35 GBP/USD