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DAILY ANALYSIS

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Forecasting Strategy for Short Term Trade

EUR/USD

The EUR/USD pair approaches December monthly high amid the broad dollar’s weakness, triggered by Fed’s chair Powell, deter to tame inflation but cautious on reducing the balance sheet. Euro trades near the upper end of its latest range, defined by the December monthly high at 1.1385. The daily chart indicates that the bullish potential is still limited. The pair is holding a handful of pips above a flat 20 SMA, while the longer moving averages maintain their bearish slopes well above the current level.

Euro traded as high as 1.1374 on Tuesday, holding nearby ahead of the daily close. The greenback took a dive following comments from US Federal Reserve chair Jerome Powell, who participated in the hearings before the Senate for a second mandate.

USD/JPY

A combination of factors assisted USD/JPY to regain positive traction on Tuesday. A positive risk tone undermined the safe-haven JPY and extended some support. The USD/JPY pair built on its steady intraday positive move and climbed to a fresh daily high, around the 115.65 region during the early North American session.

Having defended the key 115.00 psychological mark, the USD/JPY pair caught some fresh bids on Tuesday and has now reversed the previous day's losses to a one-week low.

GBP/USD

During the New York session, the GBP/USD climbs above the psychological 1.3600 figure, trading at 1.3618 at the time of writing. The GBP/USD is neutral-upward biased, despite trading below the 200-day moving average (DMA,) which sits at 1.3736, well above the spot price. At press time, it is trading above 1.3600, a level that was last seen on November 11, 2021, a signal that opens the door for a test of the 1.3700 figure, though there would be some hurdles on the way up.

AUD/USD

The AUD/USD has seen upside in recent trade and recently hit session highs a whisker below the 0.7200 level as the dollar suffers broad weakness in wake of remarks from Fed chair Jerome Powell. Powell’s remarks, made at his renomination hearing before the Senate Banking Committee, were broadly in line with the hawkish tone of the Fed minutes released last week, with Powell referencing plans to lift rates and begin balance sheet reduction in 2022. 

The presence of the 21-day moving average in the 0.7190 is currently offering resistance, as has been the case over the past three sessions and a break above this area plus the 0.7200 mark could open the door to a prolonged move back towards recent highs in the 0.7275 area. Should the dollar continue to fail to benefit from hawkish Fed vibes and strong/hawkish US data this week, that could provoke further profit-taking and exacerbate recent upside.

XAU/USD

Gold advances sharply, above $1800 as Federal Reserve Chairman Jerome Powell crossed the wires. At the time of writing, XAU/USD is trading at $1.814.50 during the North American session. The US 10-year benchmark note drops one and a half basis points, from 1.78% to 1.764%, a headwind for the greenback. Powell said that the Fed would use their tools to get inflation towards the central bank target and emphasize that the US economy no longer needs accommodation.

The first ceiling level for gold would be the January 3 daily high at $1.832, followed by November 16, 2021, pivot high at $1.877. On the flip side, gold’s first support would be the January 6 daily high, previous resistance-turned-support at $1.811.54, followed by the psychological $1.800.

WTI

Oil trades much higher early on Tuesday with West Texas Intermediate, WTI, up over 3.5%bbls at the time of writing after a rally from $78.39nnls that reached $81.56bbls. The rally comes despite the spread of the Covid-19 omicron variant and the return of supply from Libya. However, there have been reports that the Libya's biggest export terminals are shuttered due to poor weather conditions. Elsewhere, and despite rising inventories today, the EIA boosted its price forecast for Brent crude, expecting it to average US$74.95 per barrel this year, up from its December estimate of US$70.60. WTI is forecast to average US$71.32 per barrel this year, an increase from the December estimate of US$67.87.

#VZ

Verizon Communications (VZ) closed the most recent trading day at $53.87, moving -0.68% from the previous trading session. This change lagged the S&P 500's daily loss of 0.14%. Elsewhere, the Dow lost 0.45%, while the tech-heavy Nasdaq lost 0.02%. Prior to yesterday's trading, shares of the largest U.S. cellphone carrier had gained 8.07% over the past month. This has outpaced the Computer and Technology sector's loss of 5.82% and the S&P 500's loss of 0.13% in that time.

Verizon Communications will be looking to display strength as it nears its next earnings release, which is expected to be January 25, 2022. On that day, Verizon Communications is projected to report earnings of $1.28 per share, which would represent year-over-year growth of 5.79%.

#WMT

Walmart Inc. (NYSE:WMT) plans to greatly expand its home delivery service, with the reach of its InHome program expected to grow by five-fold from 6 million U.S. households to 30 million by the end of this year. To support the expansion, the company plans to hire more than 3,000 associate delivery drivers this year as well as build out a fleet of 100% all-electric delivery vans. Furthermore, also announced an agreement to reserve 5,000 electric vans from BrightDrop to be used for the InHome delivery fleet.

Investors couldn't help but be pleased by the plans, though Walmarts stock was trading at $143.97 just before midday yesterday, down 0.63%. According to CNN, 31 analysts offering 12-month price forecasts for Walmart have a median target of $170.00, with a high estimate of $201.00 and a low estimate of $136.20. The median estimate represents a 17.34% increase from Friday's closing price of $144.88.

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