 Welcome to Tickmail Weekly Market Outlook for week commencing the 25th of January with me, Patrick Munley. In the US policymakers in Washington could potentially drag the dollar in both directions next week. On one hand, the focus will return to the Senate and whether Biden's $1.9 trillion stimulus plan can progress in its current form or has to be dismantled with cash holdings at the lowest level since 2013, a staggering stimulus plan may be risk negative and dollar positive. On the other hand, Wednesday's FOMC meeting should see the Federal Reserve retain its double-shout look and recommit to buying $120 billion of assets per month until substantial progress has been made towards its goals, which would prove to be dollar negative. There's also quite a bit of US data next week. The highlight will probably be the first look at 4th quarter 2020 GDP, expected at 4% plus quarter on quarter annualised. We'll also see two readings of January consumer confidence and personal income and spending data for December. In addition to US data, the IMF will release an update of its World Economic Outlook at the World Economic Forum on Tuesday. In its October update, it projected world output at 5.2% this year after 4.4% contraction in 2020, or probably revised 2021 US growth higher and eurozone perhaps Chinese growth a little lower. Overall, these adjustments can probably add to the consolidatory mood that we have witnessed in the foreign exchange markets. From a technical perspective, the dollar index has done enough to technically satisfy a three-wave correction here at the test of 9105. But as we continue to find some support here at the 8970 area, still the potential for another leg higher here to test the 9160 resistance zone that I'm looking for. From here, I'd certainly be watching for bearish reversal patterns, short positions looking for that 8750 downside objective. If the dollar index fails to maintain the 8970 sport, then I look for a pretty quick retest of the prior lows at 8914 and from there we can expect the dollar to melt away down to this 8750 downside objective. So key to see how we open the week and if we can find some early support for the dollar, then like I say, look for a test up to the 9160 for opportunity to do something on the short side. In terms of the euro held up surprisingly well over the prior week with the European Central Bank backing away from its full use of the pandemic emergency purchase programme envelope, perhaps giving it a bit of a lift. The external environment does not look too rosy for a really strong euro advance though, where the dollar range of bear trend has stalled and Italian politics could yet deliver a sting in its tail. For the week ahead, we'll be looking to see what impact broadening lockdowns are having on the continent and whether ECB president Lagarde and chief economist Philip Lane will try to address the modest sell-off in eurozone debt markets with more dovish commentary. They both speak on Monday and Wednesday respectively. We will also hear from German Chancellor Angela Merkel and French president Emmanuel Macron at the virtual Davos event, also joined by Chinese president Xi Jinping, presumably COVID and climate change will top the agenda. On balance, we can expect that to have relatively little impact on the euro dollar. From a technical perspective, the euro will close the week above the monthly and the weekly pivot. If the euro can find some initial support as we head into the early part of the week around this 2130 area, we could see an extension higher to challenge the prior cycle highs at 123.50 on route to test this ascending trend line resistance and monthly predicted range resistance at 124.38. From there, I think we could witness a more pronounced corrective phase in the euro. However, if we lose the support at the 2130, then we can expect another test down to take a look at demand below the 120 level, which I expect to find some support. So it's going to be key to see how we open the week and whether or not we can maintain trade above the monthly pivot at 124.50 if we can, and I think we can ground higher in terms of the euro. Sterling has really got a fair amount of good news priced in at the moment with respect to the reduced odds of negative rates in the UK and faster vaccination programmes. There are limited catalyst relief for sterling to move decisively in either direction this week. On the data front, the material missing the UK services PMI reversed the prior sterling gains while the majority of manufacturers reported a worse supplier performance linked to Brexit. The PMI miss does not tell us much about GDP figures as the relationship between PMIs and GDP is now pretty weak, suggesting there's no long lasting negative impact on sterling. The focus for the weekend will be on the UK employment numbers. Jobless rates set to increase further towards 6% in November, but the impact on sterling should be limited reiterating this neutral idea in terms of sterling at the moment. We are grinding up to make new highs in sterling on Thursday with them reversed on Friday. We closed the middle of the range on Friday. No, we trade. We closed above the weekly and the monthly pivot. Whilst we continue to find support in this 136 area, I'm looking for a test of offers and stops above 138. From there I think I'll be watching for bearish reversal patterns as I think we can get a corrective move lower to ultimately test this major ascending rate. The trend line support coming in around 134.50. From there again I'll be watching for bullish reversal patterns at long positions. Ultimately looking for a test in the coming weeks of the 140 level. Even though the dollyone isn't really going anywhere at the moment, a one month realised volatility has actually dropped to 4.6 from close to 7% in November. Traders are still prepared to pay 6.3% for one month implied volatility. In effect they're not buying into this idea of a sustained drop in volatility. One can understand why equities do seem a bit stretched and the Japanese yen is still probably seen as one of the best defensive currencies in the event of a market correction. Tight dollyone ranges would seem to be the order of the week, although the yen could get more interesting over coming weeks. Main data next week will be the BOJ minutes on Monday and Thursday's CPI and retail sales and employment data. Bank of Japan is expected to unveil a monetary policy strategy review at its meeting in March. The strategy is whether it will tweak to its current rather complex toolkit or something more drastic, especially if COVID trends continue in the wrong direction. So from a technical perspective as the dollyone continues to find support the 103.30 area, I'm looking for a test of the 104.50 descending trend line resistance projected monthly range resistance. I'll be looking to set short positions there with bearish reversal patterns confirming ultimately looking for a test of these prior lows at the 101.20. Finally, down under in Australia the Aussie really bore the brunt of a risk off environment wiping out its weekly gains on Friday, which were helped by signs of resilience in the Australian labour market and is back to trade just above the 77 level. Also contributing to the Aussie's loss of momentum was the dramatic fall in December retail sales, which contracted by 4.2% after the jump of 7.1% seen in November. In the week ahead, the key data released to monitor is the fourth quarter inflation report. Consensus appears centered around a flattening in the year on year readings at 0.7%. But we could see the impact of domestic and external virus related factors as having pushed the figure to 0.5%. This may put some short-term pressure on the Aussie next week as it will fuel expectations of an even longer period of lower rates in Australia. However, doubt that will be enough to trigger speculation of more easing by the central bank, which appears to be out of firepower, considering negative rates have been ruled out. So, from a technical perspective, respect to the Aussie dollar, obviously we're in this tight 76-50 range. If we take out the 76-50 sport, I'm looking for a test of the major ascending trend line support back towards 75-30. From there, I would certainly be interested in looking at bullish reversal patterns to set long positions, targeting move up to test the projected daily range resistance and the ascending trend line resistance up above the 80 level. So, watch for, if we can get a break of the support, like I say, at the 76-60 area, then I think we tray down to the 75-30. But from there, certainly want to pay attention to bullish reversal patterns to set long positions targeting the 80 level. That concludes the weekly market outlook for weak menacing January 25th. As always, if you're available, join me on Thursdays for a review of 26 instruments, all the FX majors, commodities, global equity indexes, and even take a look at Bitcoin. So, that's Thursday at 1pm. Hope you all have a good week and I'll see you on Thursday. Thanks very much.