empty
27.01.2025 09:31 AM
Correction in U.S. Stock Indices and Dollar Strength May Be Short-Lived (Potential for a Local Decline in the NASDAQ CFD and Growth in USD/CAD Pair)

The upcoming week will be filled with important events and the release of significant economic data, which will undoubtedly have a noticeable impact on global market dynamics.

Let's begin by discussing the main political and geopolitical events of the past week. Since taking office, President Donald Trump has made numerous statements and taken actions that directly affect market conditions. A primary concern has been the issue of tariffs and duties on imports, which, coupled with geopolitical tensions, has created anxiety among investors. On Friday, while speaking online at the forum in Davos, the president emphasized the need to continue lowering interest rates. This statement led to an increase in demand for company shares. However, with the Federal Reserve meeting approaching and a wealth of important economic data as well as earnings reports from several major American companies on the horizon, investors are choosing to reduce the number of previously opened positions.

The ongoing discussions around tariff plans and immigration control are negatively impacting U.S. equities while simultaneously bolstering the dollar as a safe-haven currency. However, the market's response to the upcoming FOMC meeting and recent economic reports remains uncertain.

According to data from federal funds futures, there is a 99.5% probability that interest rates will stay unchanged within the 4.25%-4.50% range. The main focus will be on Fed Chair Jerome Powell's statement regarding the outlook for future rate cuts. Many investors believe that a rate cut is unlikely before summer. Therefore, if the FOMC statement and Powell's comments do not provide new insights, the market reaction to the meeting results is expected to be muted.

Economic reports will be crucial, particularly the Personal Consumption Expenditures (PCE) Price Index and its core reading, along with data on personal income and spending. An increase in these indicators would indicate ongoing inflationary pressures, making it less likely for the Fed to ease monetary policy before spring.

Investors will closely examine the Q4 GDP report, which is expected to indicate a slowdown in growth from 3.1% to 2.7%.

Overall, the upcoming FOMC meeting, potentially weaker GDP data, and rising PCE, combined with tariff concerns, may lead to further corrections in U.S. equities. During this time, the dollar is likely to find support.

Furthermore, anticipated rate cuts from the European Central Bank and the Bank of Canada could put pressure on the euro and the Canadian dollar against the U.S. dollar.

What could reverse the negative trends in U.S. equities, cryptocurrencies, and the strengthening of the dollar?

A series of optimistic announcements from Trump could serve as a catalyst. For example, implementing his plans to reduce the corporate tax burden would significantly boost demand in the stock market. Additionally, positive earnings reports from major companies expected this week could provide an upward momentum for equities.

Given Trump's ambitious plans to revive the U.S. economy, any correction in the stock market is likely to be short-lived. Local declines may prompt renewed buying, allowing major stock indices to resume an upward trajectory.

Daily Forecast

This image is no longer relevant

This image is no longer relevant

NASDAQ (#NDX)

The NASDAQ CFD is declining amid expectations of the FOMC meeting results and critical U.S. economic data released this week. Persistently negative market sentiment could push the CFD down to 21,000.00.

USD/CAD

The pair remains in a sideways range of 1.4300–1.4465. A potential rate cut by the Bank of Canada, coupled with the Fed maintaining its rates and overall market negativity, could drive the pair toward the upper boundary of this range at 1.4465.

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Overview of the EUR/USD Pair on February 13: Jerome Powell Fails to Impress Twice

The EUR/USD currency pair continued to trade calmly on Wednesday. Analyzing the 4-hour timeframe, it's evident that the price is contained within a triangle pattern, gradually consolidating before a potential

Paolo Greco 03:58 2025-02-13 UTC+2

EUR/USD: Inflation, the Federal Reserve, and Market Expectations

Inflation in the U.S. has accelerated again. The Consumer Price Index (CPI) report released on Wednesday favored dollar bulls, with all components exceeding expectations. Given recent statements by Federal Reserve

Irina Manzenko 23:36 2025-02-12 UTC+2

Has the Euro Forgotten About Parity?

At the end of 2024, many analysts were discussing the possibility of EUR/USD reaching parity. The U.S. economy was noticeably stronger than its European counterpart, with the Federal Reserve's December

Marek Petkovich 23:36 2025-02-12 UTC+2

EUR/JPY: What Are the Prospects for Further Growth?

This week, the EUR/JPY pair has been showing a steady recovery from its lowest level seen since September 2024. Today, the pair continues its upward momentum for the third straight

Irina Yanina 10:53 2025-02-12 UTC+2

Jerome Powell's Speech Fails to Impress Currency Traders

The euro and pound responded in a rather unusual way to yesterday's comments from Fed Chair Jerome Powell, who stated that the central bank sees no need to rush with

Jakub Novak 10:24 2025-02-12 UTC+2

What to Pay Attention to on February 12? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic events scheduled for Wednesday. The main highlight of the day is the U.S. inflation report, which is significant due to its direct impact

Paolo Greco 08:44 2025-02-12 UTC+2

What to Watch on February 11th? Fundamental Event Analysis for Beginners

There are no scheduled macroeconomic events for Tuesday. However, there will be two speeches by central bank governors today. The euro and the pound continue to show bearish tendencies

Paolo Greco 10:58 2025-02-11 UTC+2

GBP/JPY: Analysis and Forecast

The GBP/JPY pair is exhibiting a moderate intraday recovery, rising from levels last seen in September of last year and climbing above the key psychological level of 189.00, thereby breaking

Irina Yanina 17:55 2025-02-10 UTC+2

What to Watch on February 10th? Fundamental Events Breakdown for Beginners

There are no major macroeconomic events scheduled for Monday. As a result, low volatility and a "boring Monday" are likely—something we haven't seen on the market for quite some time

Paolo Greco 07:32 2025-02-10 UTC+2

USD/JPY. Analysis and Forecast

The Japanese yen continues to experience modest intraday losses against the U.S. dollar, following cautious comments from the International Monetary Fund (IMF). However, the decline remains limited, as expectations grow

Irina Yanina 14:07 2025-02-07 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.