Forex Market Analysis: USD Steadiness Amid Core PCE Data Anticipation and Stock Market Optimism

February 28, 2024

Key Highlights:

  • The US dollar shows uncertainty with market anticipation of pivotal US data.
  • Core PCE data release on Thursday is in the spotlight, influencing investor focus.
  • Analysis includes a detailed technical perspective on EUR/USD and GBP/USD pairs.

Trading Opportunities:

  • Diego Colman recommends checking the free Top Trading Opportunities Forecast.

Market Dynamics and Predictions:

  • The US dollar’s movement was minimal, with mixed responses from US Treasury yields.
  • Market participants are cautious, waiting for the core PCE deflator data.
  • Expected January core PCE rise of 0.4% month-on-month, with a slight decrease in the annual rate from 2.9% to 2.8%.

Inflation and Interest Rates:

  • Concerns of higher than expected CPI and PPI could mirror in the PCE report, affecting inflation expectations.
  • A higher inflation figure may delay the Federal Reserve’s rate cuts, impacting bond yields and potentially strengthening the US dollar.


  • Wall Street’s optimism grows as the S&P 500 exceeds 5,000 points, with strategists predicting a quicker climb to the next 1,000 points.
  • Barclays raises its year-end S&P 500 target to 5,300, up from 4,800, buoyed by strong Big Tech earnings and a robust US economy.

Bull Case Scenario:

  • Barclays suggests a potential rise to 6,050 for the S&P 500 if Big Tech’s earnings outshine expectations.
  • The analysis sees a tilt toward bullish outcomes, forecasting economic growth over a mild recession.

Key Factors:

  • Continued success in Big Tech and a rebound in other sectors’ earnings could propel the S&P 500 to new heights.
  • Krishna from Barclays anticipates the S&P 500 could reach 6,050, based on $252 earnings per share.

Similar Predictions:

  • Capital Economics and Yardeni Research share optimistic views, with targets of 6,000 by 2025 and 6,500 by 2026 respectively.
  • Ed Yardeni emphasizes the US economy’s productivity growth and tech advancements as major drivers.

Market Attractiveness:

  • The US market’s standout performance, especially compared to China, is highlighted as a key investment allure.
  • Yardeni stresses the role of productivity and technological innovation in fuelling market gains.

AI’s Impact and Bubble Dynamics:

  • John Higgins of Capital Economics links the S&P 500’s potential to reach 6,500 by the end of 2025 to the AI technology bubble.
  • The current market bubble, driven by AI, is likened to the dot-com era but with significant room for growth

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