FUNDAMENTAL WEEKLY REVIEW (January 29 - February 2, 2024)

The dollar starts the year with strong economic indicators. Following robust non-farm payrolls and an increase in CPI inflation, American bulls were pleased with personal consumption expenditures last Friday. Although the core index slightly missed at 2.9 versus 3.0, personal spending significantly exceeded expectations - 0.7 versus 0.4.

Another key fundamental event of the past week was the ECB meeting on Thursday. It proceeded strictly as expected - no change in rates, and they outlined the timeline for the interest rate reduction, starting in the summer of 2024. However, the market considers these dates quite conservative and expects an earlier move, possibly in the spring.

Christine Lagarde's rhetoric remained traditionally dovish, with the main thesis being: "I do not see a second-round effect of inflation growth." All of this, combined with strong U.S. GDP figures (also released on Thursday), allowed the greenback to attack the 8th figure again. A crucial level for the euro-dollar pair at the moment.

As for the current week, there will be many important economic data and FA events, with investors paying special attention to the FOMC meeting (Wednesday), the Bank of England (Thursday), and U.S. labor market reports on Friday.

Yes, the January meeting will be preparatory - the main market events are expected at the March meeting. Changes in January are unlikely (97.9% chance of no rate change according to CME group data). However, this won't stop Powell from expressing his expectations about the timing of the first rate cut with a reduction in the QT volume during the press conference.

Plus, market sharks will be watching for a potential shift in emphasis from FOMC members. Powell mentioned at the end of last year that the Fed can now focus on both sides of its mandate - balancing priorities of inflation and the labor market in its actions. In case of the first weak non-farm payrolls (currently forecasted at 173k versus 216k), it would prompt the regulator to cut rates on the March 20 meeting. However, if the labor market continues to grow, there is no need to expect a rate cut in March.

What's important on Monday?

There are no significant news in today's protocol, so it's unlikely to expect significant volatility and set distant targets. The price may hover in the range of 1.085 - 1.085, gathering strength for an assault on the 8th level.