Nasdaq 100 retreats, Dow Jones rises as sector rotation continues

American stocks were mixed on Monday as the crisis in Ukraine escalated, and the Fed decision neared. Dow Jones rose by more than 200 points while the S&P 500 index rose slightly. The tech-heavy Nasdaq 100 index dropped by more than 100 points. Analysts expect that companies will continue facing significant margin pressures in the coming months as the cost of raw materials and shipping continues to escalate. In a statement, Elon Musk said that Tesla and SpaceX have already started feeling the pain of rising prices.

The US dollar was relatively muted in the Asian session as investors waited for the upcoming producer price index (PPI). This is an important gauge of inflation among producers and a lagging indicator of future consumer prices. Economists expect the headline CPI dropped slightly from 1.0% to 0.9% in January. On a year-on-year basis, they see the PPI rising to about 9.7%. These numbers will come a few days after the Bureau of Labor Statistics published strong consumer inflation numbers. The Fed will start its March meeting later today.

There will be several important economic numbers scheduled later today. In the UK, the Office of National Statistics will publish the latest UK jobs data. Economists expect the numbers to reveal that the UK unemployment rate fell to about 4.0% in January. If they are accurate, it will be the lowest figure since the pandemic started. In Switzerland, the statistics agency will release the latest producer price index (PPI) data while the American Petroleum Institute will publish inventory data.

EUR/USD

The EURUSD remained in a consolidation mode on Tuesday morning as focus remains on the Fed. It is trading at 1.0977, which was slightly above this week’s low of 1.0900. On the four-hour chart, the pair is slightly above the 23.6% Fibonacci retracement level. It is also oscillating around the 25-day and 50-day moving averages while the MACD and the RSI are at a neutral level. Therefore, the pair will likely remain in this range today.

USD/CHF

The USDCHF pair maintained its bullish trend ahead of the Swiss PPI data. It rose to a high of 0.9360, which was the highest point in months. It is along the upper side of the Bollinger Bands while the pair remains above the 25-day and 50-day moving averages. The RSI and MACD have been in an upward trend. Therefore, the pair will likely keep rising as bulls target the next important resistance at 0.9400.

EUR/JPY

The EURJPY pair crashed hard last week after the hawkish ECB decision. It landed at a low of 124.31. The pair has rebounded and is currently trading at 129.57, which was the highest point since February 28. It has risen above the 25-day MA and is approaching the 61.8% Fibonacci retracement level. The Relative Strength Index (RSI) has moved close to its overbought level. Therefore, the pair will likely keep rising in the coming days.