Stocks under pressure again, USD ticks higher

However, the selling returned today as EU traders sold the rally, bringing the US benchmarks down 1-2% during the London session. 

US yields remain elevated, despite the recent correction, putting pressure on growth assets - such as tech companies and cyclical commodities.

On Monday, the Deutsche Bundesbank had warned in its monthly bulletin that the economy had likely contracted in the fourth quarter, as industry struggled with sustained chip shortages and, from December, a fresh wave of Covid-19.

The euro slid yesterday as traders piled into safe-havens, such as the USD or US bonds. It looks like the EURUSD pair is about to break below the 1.13 threshold decisively, possibly starting another leg lower toward the actual cycle lows at 1.12.

Today's German IFO surveys failed to help the shared currency, despite the IFO expectations gauge rising from 92.7 to 95.2.

Later in the session, the US consumer confidence for January will be published, along with the Richmond and Dallas fed manufacturing indices for the same month. Lastly, the housing price index is on the agenda. Neither of these numbers usually have any significant impact on the financial markets.

The US Federal Reserve begins its two-day policy meeting today. Although no changes to monetary policy are expected, the following statement, dot plot, and any additional information regarding rate hikes and the balance sheet reduction will be crucial for investors.