11.01.202210:31 Forex Analysis & Reviews: US stock market registers bullish reversal

S&P 500

The main US market index saw a bullish reversal on Monday.

On Monday, major US indices were mixed: the Dow Jones lost 0.5%, the NASDAQ Composite added 0.1%, the S&P 500 slid by 0.15%.

Asian markets fell on Tuesday: the indices of Japan and China declined by 0.9% and 0.8% respectively.

Energy market: oil remains at 2-month highs. Brent is trading at $81.30. Increased demand for energy resources in the winter season in the US and Europe supports prices amid OPEC's tight quota position.

Epidemiological situation: The world recorded 2.17 million new cases on the first working day. The United States reported 670,000 new infections, which is about 20% below the high posted on January 7. The situation in Western Europe is still challenging. France, Italy, Spain, and Britain recorded 100,000-140,000 new coronavirus cases on average. However, mortality rates remain relatively low.

S&P 500: 4,670. Trading range: 4,640 - 4,710. Yesterday, the US market was really active. Apparently, investors returned to the market. In the early trade, the S&P 500 index fell sharply by about 1.5% but then recouped its losses. As a result, a strong bullish candlestick was formed on the daily chart, thus indicating an upward reversal. Today, the US market is expected to continue trading upwards. Then, much will depend on fresh inflation data for December - the CPI report will be released on Wednesday. Many investors are following the US-Russia talks on security in Europe. The negotiations were held in Geneva yesterday. According to the first reports, no agreements were reached. This is not surprising as the parties' views are fundamentally different.

Today, Fed Chairman Jerome Powell will take part in a session of Congress and deliver a speech on inflation issues. In fact, the Fed was late in responding to high inflation as the inflation rate began to accelerate in April 2021. Fed members expected inflation to decline, but this did not happen. As a result, the regulator began to bring up this issue only in November.

USDX: 95.85. Trading range: 95.50 - 96.10. Both the US dollar index and the euro showed strong but erratic movements during the last two trading sessions. The market cannot yet determine the direction and continues to trade within a range.

USD/CAD: 1.2660. Trading range 1.2600 - 1.2720. The pair may break through the lower boundary of the range in case of a new rally in oil prices.

Conclusion: Market participants are awaiting new data on inflation in the United States to be released tomorrow. In the meantime, the market is range-bound with a slight predominance of bullish positions.