Markets have been contemplating a slower pace of rate hikes by the US Federal Reserve, which has been supportive for Wall Street. Recent Fed minutes have pointed to such a direction, but also to further tightening and a higher terminal rate than previously expected. 
The current week started with hawkish commentary, as Mr Bullard expressed the belief that markets "are underpricing a little bit" the risks of more aggressive than less aggressive stance . Along with broader risk aversion stemming from China's Covid-19 situation and relevant protests, SPX500 was off to a poor weekly start.
Today however it finds support, as sentiment improves amidst hopes that China will soften its strict zero-Covid strategy, although nothing really meaningful has been announced so far. Markets will also be looking at a series of key data points from the US throughout the week, which can spur volatility and determine the trajectory of the Index. These include the PCE inflation, the Jobs report and a speech by Fed-Chair Powell.
SPX500 heads towards its second straight profitable month, but failed to set new highs during the previous holiday-shortened week. This creates risk for further pressure towards the 3,920-00 region, which includes the 23.6% Fibonacci of October low/November high rise and the EMA200. It is a critical confluence that has the ability support the index, although daily closes below it, could accelerate a slide to 3.833-12.
Above the EMA200, bulls are in the driver's seat and can extend their two-month advance to new highs (4,043), but a catalyst will be required for further gains past the descending trend line from January's record highs, at around 4,100.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 29 Nov 2022 https://www.federalreserve.gov/monetarypolicy/fomcminutes20211103.htm
Retrieved 04 Feb 2023 https://www.stlouisfed.org/from-the-president/video-appearances/2022/bullard-marketwatch