DBG Markets: Market Report for Feb 5, 2026

Market Shifts to "Defensive Rotation": Data Conflict and Central Bank Super Thursday

The market narrative has undergone a sharp shift toward "defensive rotation" as investors grapple with conflicting economic signals. A disastrous ADP report initially sparked growth fears, but resilient services data has provided a necessary stabilizer, leading to a visible divide across major asset classes.

ADP vs. ISM Services: Sector Rotation & Dollar Outlook

The equity markets are currently witnessing a significant rotation. Investors are trimming exposure to high-valuation Tech/AI stocks due to concerns over a potential growth collapse, while capital is seeking refuge in "Old Economy" and high-dividend sectors. This divergence helped the Dow Jones hold steady while the Nasdaq faced intense pressure.

The Nasdaq led the decline, falling nearly 1.7% as the 22k ADP print (far below the 47k consensus) raised the specter of a rapid economic slowdown, even though the strong ISM Services PMI (53.8) mitigated some of the panic.

Nasdaq Outlook

Expect this divergence to continue. With the NFP out of the picture tomorrow, the “Value” trade will likely outperform as Tech may remain in risk-aversion mode.

UT100, Daily Chart

Over on the Nasdaq (UT100), the 25,000 level continues to be a key level to watch. Recent falls have seen the Nasdaq move into a rangebound pattern. Holding above 25,000 would see the index continue in a rangebound state, while a break below would signal the start of a deeper pullback.

Dollar Outlook

The Greenback remains the dominant force, firmly holding above the 97.00 handle. While the weak labor data initially capped the upside, the solid services sector performance confirms the broader economy remains resilient, supporting the Dollar.

USD Index, H2 Chart

A firm breakout above 97.50 would suggest a bullish continuation for the Dollar after the recent bullish reversal was confirmed. Watch the 97.50 level closely to determine if it acts as support or resistance.

Outlook: The Dollar may remain in consolidation if 97.50 fails to break. Conversely, a breakdown below the 97.0 – 96.80 zone would signal a broader bearish continuation.

Precious Metals: The Battle for Psychological Levels

Precious metals are struggling to maintain momentum after their initial technical recovery. The massive stop-loss selling seen last week has left deep technical scars, turning previous floors into formidable ceilings.

Gold Outlook

The $5,000 level remains the ultimate psychological battlefield. After a brief spike toward $5,100, selling pressure re-emerged following the ADP release, dragging prices back toward the $4,880 area.

XAUUSD, H2 Chart

Until Gold can establish a firm daily close above $5,000, it remains susceptible to wide-range consolidation. $5,000 remains a major resistance zone, and further downside toward 4,800 is likely. For the downside, a failure to hold $4,800 could lead to a retest of the $4,600 "fair value" zone.

Trading Strategies: Watch the consolidation zones of 4800 – 5000 (Upper trading zone) and 4800 – 4630 (Lower trading zone). These will keep Gold in a consolidation phase and provide short-term trading opportunities.

Silver Outlook

Silver is facing similar headwinds, with the $90 level acting as a structural ceiling.

XAGUSD, H2 Chart

The recent rally stalled precisely at $90.00. Expect Silver to remain range-bound between $90 and $80 ($75). A decisive break above $90 is required to validate a stronger bullish reversal; otherwise, the path of least resistance remains consolidation within this range.

However, unlike Gold, a breakdown toward 75 could lead to a deeper pullback toward 70.

What to Watch Today: Central Bank Super Thursday

With the Friday Non-Farm Payrolls (NFP) report officially cancelled due to the recent partial government shutdown, today's central bank decisions have become the "main event" of the week.

· ECB Rate Decision: The European Central Bank is widely expected to hold rates. With Eurozone core CPI at 2.3%, the focus is on whether Lagarde will signal further "wait-and-see" or express concern about the Euro's recent volatility.

· BoE Rate Decision: The Bank of England is also expected to hold at 3.75%. However, the 5-4 vote split remains the key variable. A "Hawkish Hold" could provide temporary support for the Pound against the resurgent Dollar.

Our outlook for GBPUSD and EURUSD remains the same as covered in Mondays Weekly Outlook.

Bottom Line for Today

The market is currently caught between weakening labor trends (ADP) and robust economic activity (ISM Services). This divergence is fueling the rotation out of Growth and into Value.

· Strategy Note: Do not chase the recent bounce in Gold or Silver unless the $5,000 and $90 levels are cleared with conviction. For indices, the "Sell Tech, Buy Value" theme is likely to persist as long as the labor market remains in doubt.

· Today's Focus: High volatility is expected during the London/New York overlap as central bank rhetoric meets the market's defensive posture.