How Will US Dollar & Other Markets React To Trump's Virtual Davos Address?
Good Thursday Morning, MPTraders! January 23, 2025-- Pre-Market Update: The highlight of today's session will be President Trump's 11 AM ET virtual address to many of his closest "friends" at Davos, Switzerland, and the Q&A session with European executives afterward. I think we should expect Trump to pound the table about recognizable America First themes designed to strike fear into America's adversaries and competitors alike:
America will no longer be ripped off by other nations on trade and defense...
America will become the predominant energy provider to Europe, supplanting Russia...
America will demand EU cooperation on trade; otherwise, it will face high barriers to entry (tariffs) on European goods...
America will demand NATO nations pay up for the US defense umbrella...
We have heard all of this before, but Trump, the master marketer, always throws in a surprise or a "shocker," which tells me to watch the US Dollar (see my attached DXY Chart below), the precious metals, and the stock indices, which are ripe for a pullback that will inform us that "buy-the-dip" remains the dominant market mantra, or not... (See my attached Hourly Chart)...
This AM, ES is trading 7-10 points lower at 6110-6113 but atop support (formerly resistance) from 6082 to 6107, which so far, represents a minor pullback from yest's post-1/13/25 upleg high at 6135.75. As long as any forthcoming weakness is contained within or above the 6082-6107 support window, the bulls will remain in directional control ahead of upside continuation to my next optimal target zone of 6150-6160.
Should something POTUS say in his virtual Davos speech later this AM that presses ES beneath 6082, ES will be vulnerable to downside continuation into the 6040-6050 support window where the weakness will test the post-1/13/25 up trendline... Last is 6112.75...
As mentioned earlier, price movement in the Dollar Index (DXY) during and after POTUS' Davos speech and Q&A will be informative and potentially consequential for many markets. My attached Daily DXY Chart exhibits a "budding bearish setup" in that the stair-step decline from the 1/13/25 high at 110.18 to yest's (1/22/25) low at 107.75 exhibits bearish form, and as such, tilts my bias to the downside for a press below the 50 DMA, now at 107.61 to a next lower target in and around 107.00... Let's watchDXY during Trump's remarks... Last is 108.35...