Risk-on Trading Continues on Tuesday, Stocks Advance

On the other hand, the economic recovery in the Eurozone could be a cause for concern after preliminary gross domestic product data released on Monday showed economic output slowed in the fourth quarter of 2021.

Additionally, German retail sales fell sharply in December, dropping to -5.5% month-on-month, despite the holiday shopping season. As a result, the yearly gauge decelerated from 0.5% to 0.0%.

Later today, the German labor market data will be released, along with German and EU manufacturing PMIs.

The manufacturing ISM for January is expected to tick lower to 57.5 from 58.7 previously during the US session. In addition, the inflation subindex will likely stay near last month's 68.2, while the employment subindex is seen sliding slightly. 

In the FX market, the EURUSD pair surged yesterday, returning above the critical support/resistance of 1.12. At the moment, the latest breakdown below that level looks like a bearish trap, which usually leads to a strong rally. We shall see. 

During the Asian session, investors will focus on the New Zealand labor market data, likely causing volatility in the NZDUSD pair. 

Elsewhere, US yields have failed to push to new highs this week, resulting in a slight decline/consolidation, which probably supported other risk assets, such as precious metals and stocks.