Happy 2023!

First and foremost, we want to wish all of our readers a prosperous new year. Alchemy Markets’ blog has had a remarkable year. In Q3 2022, our output was ramped up, and since then, more than 50 Market Analysis reports and more than 25 “Get to Know Your” articles have been released.

Our next goal is to continue providing our readers with high-caliber articles while assisting you in staying current with market trends.

Key Events

* Only events deemed important by our Technical Analysts are included here. Please refer to Trading Central’s Economic Calendar for the full schedule. 

This week starts off slowly with most banks and financial institutions still on holiday in most parts of the world. The US ISM Manufacturing PMI will kick things off this week, followed by the FOMC Meeting Minutes and then NFP on Friday.

FOMC Meeting Minutes

The minutes should be carefully read by traders to look for any indications that the Fed may not be as hawkish as it appeared to be at its previous meeting. Bears will likely take advantage of this opportunity to drag the dollar lower if the markets sense any reduction in the Fed’s hawkishness.

Non-Farm Payroll

[Previous 263k, Consensus 200k]

As with most other months, NFP this month will take place on the first Friday. The labor market has shown resilience over the past few months with actual numbers exceeding expectations consistently in the face of contractionary monetary policies. Here is a visual tool for your reference-

Source: Trading Central Economic Calendar

Over the past year, the actual print beat consensus most of the time except for two slight misses. Therefore, the NFP data this coming Friday is critical as it would be a key factor as to whether the Fed would have to send its interest rates higher to tame demand and quell inflation in the U.S.

If the NFP headline figure > 200k,
A higher chance that the Fed would have to send its interest rates higher to tame demand and quell inflation in the U.S. The greenback may capitalize on this chance to stage a rebound.

If the NFP headline figure < 200k,
However, if we see evidence of a slowing labor market, whether through a headline NFP figure below 200k or an unemployment rate above 3.7%, this might prolong the dollar’s falls since Q4 2022.

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Gold

XAUUSD Daily

The yellow metal is still inching higher although it’s the festive season and trading volume remained low with most participants out of the markets. 

Gold just bounced off the $1806 key resistance-turned-support on the technical front, though much of the price action is still confined within the rising wedge. Should the bulls continue to be in charge, the 50% Fibonacci retracement level is the next target. 

The FOMC minutes and NFP will cause a lot of volatility for gold as the markets are thin. Stay cautious if you are trading.

EURUSD

EURUSD Daily

Notice something similar? The Euro is crawling higher against the US dollar as well and is now faced with a key resistance near 1.0770. Being stuck in between the aforementioned resistance and the 1.0610 support, the pair needs more trading volume for a breakout to either side.

As for the directional bias, our preference is now tilted toward a bearish retracement due to the fact that the pair has had a prolonged up move. If the 1.0610 support breaks, we are eyeing a new leg near the 10350 area.

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Ru Yi 

Financial Market Analyst

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