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AUD/USD gives away part of the recent recovery. Dollar dynamics continue to weigh on the Aussie dollar. No changes to expectations around an interest rate hold by the RBA. The noticeable resumption of the selling bias around the Aussie dollar prompted AUS/USD to leave behind a two-day recovery and remain under pressure in the sub-0.6600 zone at the beginning of a new trading week. So far, dollar dynamics coupled with still-absent signs of a convincing economic bounce in the post-pandemic era in China are expected to keep dictating the mood around spot and maintain its price action subdued, all in combination with a predicted steady hand by the RBA at its gathering in February. Also contributing to the negative kickstart of the new trading week emerged an equally discouraging session of both copper prices and iron ore. Back to the RBA, the central bank is largely anticipated to leave its OCR unchanged at 4.35% next month. The downtick in inflation figures recorded in December, coupled with further cooling of the (still tight) labour market, have underpinned that consensus among market participants for the time being. That said, the near-term prospect for the AUD remains tilted to the dovish side, a… Read More »AUD/USD Forecast: Further losses not ruled out

XAU/USD Current price: 2,023.93 This week, a busy United States calendar and central banks’ announcements stand out. Wall Street extends gains on the back of solid earnings reports. XAU/USD is technically neutral in the near term, bears dominate the wider view. Spot Gold changed course after falling to $2,016.42 early in the American session and trades around $2,024, posting modest intraday losses. The US Dollar sees limited demand amid strength in global indexes, with Wall Street extending gains on the back of solid earnings reports and decreasing odds for a rate hike in March. At the same time, there is a certain quote of caution among market participants as investors await critical first-tier data spread throughout the week. The United States (US) has quite a busy calendar, as the country will release the preliminary estimate of the Q4 Gross Domestic Product (GDP), with the annualized figure expected at 2%, down from 4.9% in Q3. Later in the week, the US will offer the December Core Personal Consumption Expenditures  (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. The PCE Price Index is foreseen to be up 0.2% MoM and 3.0% YoY, slightly below November figures. In the middle, several… Read More »Gold Price Forecast: XAU/USD trims Friday’s gains as caution reigns

EUR/USD Current price: 1.0891 The optimistic tone of global equities put a cap on US Dollar gains. Investors await central banks’ decisions and critical US data. EUR/USD trades within familiar levels, bears maintain the lead. The EUR/USD pair trades uneventfully just below the 1.0900 mark on Monday, confined to a limited range. The absence of relevant macroeconomic news and first-tier events scheduled for later in the week keeps market participants cautious. Meanwhile, the positive tone of global equities limits demand for the US Dollar. Wall Street’s strength backs the modest optimism amid earnings beating expectations. The focus these days will be on central banks, as the Bank of Japan (BoJ), the Bank of Canada (BoC), and the European Central Bank (ECB) will announce their monetary policy decisions. Additionally, the United States (US) will unveil the preliminary estimate of the Q4 Gross Domestic Product (GDP) and the December Core Personal Consumption Expenditures  (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. By the end of the week, the US Dollar could be on a much clearer trend after weeks of range trading. The upcoming American session will bring the preliminary estimate of the Eurozone Consumer Price Index, foreseen in January… Read More »EUR/USD Forecast: Bears need to take down the 1.0845 support

Summary We share the near-universally held view that the FOMC will leave the fed funds rate and pace of quantitative tightening (QT) unchanged at the conclusion of its upcoming meeting on January 31. The FOMC’s decision last month to leave the fed funds rate unchanged for a third consecutive meeting made it increasingly clear that the most aggressive tightening cycle since the 1980s has come to an end. Consequentially, overall financial conditions have eased considerably since the last policy meeting. We also look for the FOMC to remain in a holding pattern in terms of its policy guidance, and we expect only minor changes to the post-meeting statement relative to December. A change to the statement we would not be surprised to see at this meeting is the removal of the paragraph on the U.S. banking system and financial conditions. Overall, we view this meeting as one where the Committee will buy time to discern if inflation is indeed on a sustainable path back to 2% and serve as an opportunity to build consensus around the conditions for eventual policy easing. Market chatter about changes to the existing pace of QT has picked up recently, and we expect the meeting… Read More »January flashlight for the FOMC blackout period

EUR/USD fluctuates in a tight range near 1.0900 early Monday. Euro could stretch higher in case risk mood continues to improve. Key support seems to have formed in the 1.0850-1.0860 area. EUR/USD managed to edge higher during the Asian trading hours on Monday and stabilized near 1.0900 after closing the previous week in negative territory. In the absence of fundamental drivers, the risk perception could drive the pair’s action in the short term.

Gold price edges lower and stalls a two-day-old recovery trend from over a one-month low. Reduced bets for an early rate cut by the Fed turn out to be a key factor weighing on the metal. Geopolitical risks could lend support to the safe-haven XAU/USD and help limit deeper losses. Gold price (XAU/USD) kicks off the new week on a weaker note and erodes a part of its recovery gains registered over the past two trading days, from the vicinity of the $2,000 psychological mark, or over a one-month low touched last Wednesday. That said, the mixed fundamental backdrop warrants some caution before placing aggressive directional bets ahead of this week’s important macro data from the United States (US). The Advance fourth-quarter economic growth figures are due for release on Thursday, followed by the Federal Reserve’s (Fed) preferred inflation gauge on Friday, which should provide some meaningful impetus heading into the FOMC meeting on January 30-31. In the meantime, investors continue to scale back their expectations for a more aggressive policy easing by the Fed in 2024 amid a still-resilient US economy. In fact, the University of Michigan’s preliminary survey showed on Friday that the Consumer Sentiment Index shot to… Read More »Gold Price Forecast: XAU/USD bearish bias remains while below $2,040-$2,042 supply zone

Month to date, versus the US dollar, Europe’s single currency is lower by -1.3% and has erased all of December’s upside. Multi-timeframe technical approach highlights nearby resistance The Research Team acknowledged the following in recent analysis regarding the monthly timeframe: Overall, the currency pair has been in a downward trend since 2008, fashioned through a series of lower lows and lower highs evident on the monthly chart. Also apparent from this chart, the pullback from the September (2022) low of $0.9536 could be viewed as a long-term sell-on-rally scenario. Monthly resistance warrants attention overhead at $1.1233 and shares chart space with a 50-month simple moving average (SMA) at $1.1149. Equally, support from $1.0516 is noteworthy, a level that welcomed buyers in November 2023. Ultimately, given the downtrend in the EUR/USD, $1.1233 resistance will likely be a difficult barrier to penetrate and, thus, perhaps encourage selling if challenged again. Breaching current support, therefore, might be the long-term technical objective as of now, opening the door towards monthly support at $0.9873.  From the daily timeframe, you will note that price movement concluded the week flanked by the 50-day and 200-day simple moving averages at $1.0896 and $1.0845, respectively. You may recognise the… Read More »Short-term resistance eyed for the EUR/USD

In the upcoming sessions, the direction of US interest rates is expected to be influenced by economic data releases and the market’s response to the Treasury supply dynamics. When the Fed goes silent ahead of the January policy meeting, the market does not necessarily fly blind; instead, it creates an environment where market participants will zero in on incoming economic data. Additionally, the market’s response to the issuance of new bonds, reflecting the supply of government debt dynamics, will be closely watched. Investors will assess how demand for these bonds impacts yields for short-, medium-, and long-term interest rate expectations. In the early months of 2024, Treasury prices have declined, leading to higher yields. Despite the rise in bond yields, equities have not been significantly impacted, and the S&P 500 even achieved a new record high. This occurred despite the notable yield increase at the front end of the yield curve against a backdrop of resistance from policymakers who expressed concerns about aggressive pricing for potential rate cuts. But as discussed at length last week, the prevailing sentiment suggests that the path of least resistance for the Fed is leaning toward a minimum of 75 bp of insurance rate cuts… Read More »Trading the week ahead when the Fed goes silent

Forget about the Federal Reserve (Fed) dovish expectations that should be dialed back because the American economy is too strong to require a rate cut as early as March from the Fed. Forget that strong US economic data is not good news for the market. And forget about the fact that the rally in tech stocks should temper, to let the rest of the market catch up with the Magnificent 7. Because it isn’t happening. Nasdaq 100 hit a fresh ATH yesterday, even though the latest US data showed that the initial jobless claims fell more than expected to the lowest level in more than a year, the mortgage rates slipped after a two-week rise, and home data was better than expected, as well. TSM, the main chipmaker of Apple and Nvidia, jumped nearly 10% yesterday, after the company said that it expects a return to solid growth this quarter. Nvidia hit a fresh record. The US dollar index consolidates gains near its 200-DMA. The EURUSD is rangebound between its 50 and 200-DMAs, near the limit of the major 38.2% retracement on October to January rally, which should distinguish between the continuation of the positive trend or a medium term… Read More »US Dollar Index consolidates gains near its 200-DMA [Video]

EUR/USD extends its sideways consolidative price move amid mixed fundamental cues. Mixed signals from ECB policymakers hold back traders from placing directional bets. Subdued USD price action also does little to provide any meaningful impetus to the pair. The EUR/USD pair oscillates in a narrow range through the early European session on Friday and remains within the striking distance of over a one-month trough touched on Wednesday. The European Central Bank (ECB) policymakers have struggled to send a clear message if they will raise interest rates or lower them, which is holding back traders from placing directional bets around the shared currency. In fact, Bundesbank President Joachim Nagel said on Monday that it is too early for the ECB to discuss cutting interest rates as inflation remains high. In contrast, ECB Governing Council Member Tuomas Valimaki on Tuesday signalled his openness to consider lowering interest rates sooner than most of his colleagues. Furthermore, ECB President Christine Lagarde declined to push back against bets for a cumulative of over 150 basis points (bps) rate cuts this year. Lagarde, however, cautioned against premature optimism in markets amid a rise in the Eurozone inflation, to the 2.9% YoY rate in December. Apart from… Read More »EUR/USD Analysis: Languishes near monthly low, bearish potential seems intact