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
  • Trade Wise, Win Device
    Top up your account with at least $500, sign up for the contest, and get a chance to win mobile devices.
    JOIN CONTEST

Recommended Stories

Will the U.S. Stock Market Continue to Decline and the Euro Rise? (There is a chance for the growth of the CFD contract on the S&P 500 futures and the EUR/USD pair)

The main U.S. stock indexes ended the week in negative territory, reflecting a surprising increase in pessimism amid signs of a slowdown in the national economy. The Friday sell-off

Pati Gani 08:22 2025-02-24 UTC+2

What to Pay Attention to on February 24? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic events are scheduled for Monday, and none are significant. Over the past two weeks, the market has largely ignored fundamental and macroeconomic data. Last week, important reports

Paolo Greco 06:02 2025-02-24 UTC+2

EUR/USD: Final Week of February – German Elections, Core PCE Index, Second Estimate of U.S. GDP

The upcoming week is filled with important fundamental events, which puts the EUR/USD pair at a critical juncture—it could either move toward the 5th figure range or descend

Irina Manzenko 05:02 2025-02-24 UTC+2

U.S. Dollar: Weekly Preview

For many weeks, I have been emphasizing that the U.S. news backdrop would be crucial for the market. However, this is no longer entirely the case. Even in the U.S

Chin Zhao 04:51 2025-02-24 UTC+2

British Pound: Weekly Preview

The pound continues to hold confidence and market support. Unlike the euro, demand for the British currency is rising more steadily, and the corrective wave C in 2 has already

Chin Zhao 04:49 2025-02-24 UTC+2

EUR/USD Pair Review: Weekly Preview – Another Boring Week

The EUR/USD currency pair showed relatively weak volatility last week, and the euro could not continue its growth within the current correction. Only the pound is rising

Paolo Greco 02:13 2025-02-24 UTC+2

GBP/USD Pair Review: Weekly Preview – The Best for the Pound is Already Behind

The GBP/USD currency pair experienced minimal volatility again on Friday, suggesting that the upward movement may be nearing its logical conclusion. Over the past two weeks, there has been

Paolo Greco 02:13 2025-02-24 UTC+2

USD/JPY: Inflation, Kato's Statement, and the Outlook for a Downward Trend

The USD/JPY pair hit a nearly two-month low, reacting to Japan's January inflation report, but then sharply reversed following an unexpected statement from Finance Minister Katsunobu Kato.During Friday's Asian session

Irina Manzenko 12:34 2025-02-21 UTC+2

USD/JPY. Analysis and Forecast

The USD/JPY pair is staging a strong recovery, climbing nearly 150 points from the 149.30-149.25 level, the lowest since December 3. The rebound comes as the Japanese yen weakens following

Irina Yanina 12:31 2025-02-21 UTC+2

Markets. The First Results of Trump's Presidency. What's Next? (Potential USD/CAD Increase and EUR/USD Decline)

The initial impact of D. Trump's presidency on financial markets has been mixed. Let's examine the key takeaways. Starting with stock markets, the U.S. stock market has remained close

Pati Gani 09:21 2025-02-21 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.