Midday Market Update: The Calm before the Storm as Investors eye Key fundamentals.

Markets experienced a calm sentiment as the week promises to be packed with potential market movers. Earnings season chugs along, with tech giants taking center stage. Central bank minutes and economic data releases from both the US and Europe will be closely scrutinized for any signs of policy shifts or economic trends. Geopolitical developments and overall risk sentiment will also play a role in shaping market direction.

EURUSD plunged by -0.41% early European session ahead of the ECB’s De Guindos speech. The Euro continued to plummet following the ECB’s decision to keep rates unchanged. The bulls lost steam at the 1.0900 level and bears are headed for the 1.07234 level if the 1.0800 psychological level fails to hold. This week’s inflation data from the Euro area will underpin investor sentiment following unclear forward guidance by the ECB.

DXY, (the USD index) rose by +0.25% as bulls flirt with the 103.81 level ahead of key data. The Fed is scheduled to release its interest rates this week, and although it is widely expected they will keep rates unchanged, markets are pricing in a bullish stance from Jerome Powell. A break above that near-term high could strengthen a bullish bias toward the 104.263 high, a buy-side liquidity area.

AUDUSD traded higher by +0.26% ahead of key data early Tuesday. The AUDUSD soared as commodity prices spiked higher and the gold-backed economy held on to gains. Bulls are capped by the 0.66214 high and a failure to break above that high could give way for sellers targeting the equal lows below the 0.6526 support. The Australian month-over-month Retail Sales for December due for release early Tuesday are expected to shrink and that could be a major headwind for short-term bulls.

The US30 index rose by +0.05% extending 3-day gains and trading slightly above a near-term resistance at the 38110.19 level. On the downside, 37802.35 is the near-term support level. A decisive break above could signal further bullish momentum, while rejection might trigger pullbacks.

The US100 recovered 2-day losses by +0.30% on Monday ahead of key earnings from Microsoft and Apple due this week. Bulls are capped by the 17688.6, an all-time high and a failure to break above that high could cause a short-term pull-back to the 17300 level.

European stock futures were largely flat on a light economic docket. UK100 was slightly down by -0.06% after bulls rejected the 7651.0 level leading to an end of a 7-day rally. A break above that level could open the way for bulls to target the 7768.8 level. CAC40 was trading at -0.01% as bulls lost steam at the 7651 resistance level and DAX plunged by -0.41% as bulls reacted to the 16966.51 level.

In commodities, the yellow metal advanced by +0.57% although bulls remain capped by a key resistance level at 2037.64. A failure to breach that high could see bears attempt a breach of the 2001.88 support level.