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EUR/USD Current price: 1.0956 The Eurozone confirmed the Harmonized Index of Consumer Prices at 2.4% YoY in November. Market participants remain optimistic ahead of inflation updates from major economies. EUR/USD is technically bullish, although the momentum is limited. The EUR/USD pair extends its modest weekly advance on Tuesday, as the US Dollar remains unattractive in the post-central banks’ scenario, with investors looking for better options. Wall Street ended in positive territory on Monday, with the Nasdaq Composite reaching record highs amid persistent optimism. However, the absence of relevant macroeconomic data maintains most major pairs confined within familiar levels, with EUR/USD currently hovering around 1.0950. European Central Bank (ECB) officials delivered some comments. On the one hand, Andrea Enria, chairperson of the European Banking Authority, noted that there are still significant uncertainties and downside risks for Eurozone banks. On the other hand,  Governing Council member Gediminas Simkus said rate cut expectations are too optimistic, adding investors may have gotten ahead of themselves. Finally, Governing Council member and Bank of France President  Francois Villeroy de Galhau stated the central bank will not raise interest anymore. The comments did not impact the Euro, as they put nothing new on the table. Meanwhile, the… Read More »EUR/USD Forecast: Bulls aiming to recover the 1.1000 threshold

EUR/USD started to edge higher toward 1.0950 following Monday’s subdued action. The near-term technical outlook points to a build-up of bullish momentum. Hawkish comments from ECB officials could continue to support the Euro. EUR/USD failed to make a decisive move in either direction to begin the week and closed virtually unchanged on Monday. Early Tuesday, the pair started to stretch higher toward 1.0950. In the absence of high-impact data releases, comments from central bank officials could impact the action. The US Dollar held resilient against its major rivals on Monday as the benchmark 10-year US Treasury bond yield recovered toward 4% in the first half of the day. As major equity indexes in the US edged higher following a mixed opening in Wall Street, however, the USD failed to gather recovery momentum and allowed EUR/USD to remain within a tight range.

Good Morning! Dollar Index has moved up well above 102 and could test 103-103.50 before coming off while Euro is bearish below 1.0965 for a fall towards 1.0850/1.08. EURJPY is headed towards its upper end of the 154-158 range while USDJPY is expected to fall on testing 144/145. Aussie can rise towards 0.68 but Pound may dip within the 1.2550-1.28 region. USDCNY needs to break past 7.15/16 to maintain its bullishness, else would be vulnerable to see the lower levels of 7.12-7.10 soon. USDRUB could test 91 soon. USDINR tested 82.90 before rising back. There could be some chances of a decline from 83.15/20 again. EURINR is bearish while below 91. The US Treasury yields have inched up slightly but are unlikely to sustain. We expect the yields to see more fall in the coming days. The German yields have bounced back well from their support. If this sustains further rise is possible this week. The 10Yr and 5Yr GoI remained lower but stable. Outlook is bearish to see more fall from here. Dow Jones and DAX outlook is bullish while above the support 37000-36900 and 16600-16500 respectively. Nifty remain bullish for a test of its immediate resistance. Shanghai is… Read More »Morning briefing: Euro is bearish below 1.0965

As we wind down to the close of 2023, the Federal Reserve (Fed), European Central Bank (ECB) and the Bank of England (BOE) announced their rate policy decisions last week. As expected, all three have kept their respective benchmark rates unchanged. The central banks and market participants will now shift their attention from inflation pressures, pivoting to the timing and magnitude of interest rate cuts in 2024, as these global economies are in various stages of a slowdown. For this article, I have chosen to focus on the Federal Reserve (Fed) and the Bank of Japan (BOJ). With recent US November Unemployment figures, we saw an unexpected strengthening of employment and wages. Non-farm payrolls increased 199,000 last month, compared to 150,000, in the month of October. The unemployment rate fell to 3.7% from 3.9% and monthly wage growth rose more than expected. Additionally, last Tuesday, US CPI figures were released. November’s consumer price index ticked up +0.1%, from October. Core CPI also moved higher on a monthly basis. Overall inflation is still declining, as 6-month annualized core inflation is now below 3% for the first time since the beginning of 2021. At Wednesday’s FOMC announcement, Fed Chairman Powell and the… Read More »Global central banks focus in 2024

AUD/USD Current Price: 0.6703 US Dollar mixed, supported by a modest rebound in Treasury yields. RBA meeting minutes are to be released on Tuesday. The AUD/USD reached a fresh monthly high but failed to hold above 0.6730.  The AUD/USD hit a fresh four-month high on Monday at 0.6735, slightly above last week’s highs, and then pulled back. The pair continues to trade around 0.6700 as the US Dollar remains weak; however, it is stabilizing as Federal Reserve (Fed) officials pushed back against easing expectations. On a quiet Monday, most currency pairs offered limited price action. AUD/USD moved sideways after being unable to break above 0.6730. After reaching the fresh high, it pulled back to the 0.6695 area amid a stronger US Dollar due to higher Treasury Yields. Nonetheless, the pair remains near recent multi-month lows. Market sentiment sees the Fed cutting interest rates in the first half of next year, but it is not being considered as a base case scenario by Fed officials. Until the market focus shifts back to activity data, the US Dollar could remain under pressure. The key report in the US this week will be on Friday with the Core Personal Consumption Expenditure Price Index… Read More »AUD/USD Forecast: Firm at monthly highs, capped by 0.6730

The Bank of Japan has kept interest rates in negative territory since February 2016. Japanese inflation has stayed above the central bank’s 2% goal for over a year and a half. USD/JPY corrective advance could extend beyond 145.00 with a dovish central bank. The Bank of Japan (BoJ) will announce its monetary policy decision early Tuesday, with market participants expecting no surprises from it. The central bank has kept its benchmark rate unchanged at -0.1% since early 2016 and will likely keep it that way once again. Additionally, the central bank established a  Yield Curve Control (YCC) policy, limiting the yield flotation on its 10-year government bond. Regarding the latter, the latest decision was to allow a 50 basis point (bps) band on either side of its 0% target. Policymakers are still waiting for more evidence that price pressures have reached healthier levels even though annual inflation has been above 2% for over a year and a half. At the same time, fears about the consequences of leaving the ultra-loose monetary policy held them back. Officials are paving the way for a rate hike when most major central banks would engage in rate cuts. Governor Kazuo Ueda recently noted that… Read More »Bank of Japan Preview: Governor Kazuo Ueda will likely maintain a cautious stance

XAU/USD Current price: 2,022.49 Canada, the United Kingdom and the United States will release inflation updates this week. US Treasury yields remain near recent multi-week lows, undermining demand for the US Dollar. XAU/USD is technically neutral, as investors remain away from safe-haven assets. Gold prices trade with a soft tone, although XAU/USD stands a few bucks above Friday’s close at $2,018.19 a troy ounce. Demand for the US Dollar remained subdued amid softer government bond yields following the latest Federal Reserve (Fed) monetary policy decision. The central bank pretty much confirmed the end of monetary tightening by holding fire for a third consecutive meeting while beginning to pivot towards rate cuts. As a result, US Treasury yields retreated sharply, with the 10-year note offering as low as 3.92% after a record peak of 4.99% in October. At the time being, the yield on the 10-year bond stands at 3.95%, adding barely 2 basis points (bps) on the day, hardly enough to underpin the US Dollar. Meanwhile, Wall Street shrugged off the sour tone of its overseas counterparts, and the three major indexes trade in the green, further limiting demand for the safe-haven Greenback. The ruling optimism, however, also undermines demand… Read More »Gold Price Forecast: XAU/USD consolidates above $2,020 as inflation gauges loom

EUR/USD Current price: 1.0918 The German IFO survey showed Business Climate worsened in December. ECB and Fed policymakers working on the “higher for longer” case. EUR/USD holds above 1.0900 with bulls on pause but retaining control. The EUR/USD pair hovers in a tight range around the 1.0900 figure on Monday,  with the US Dollar trading mixed across the board as investors try to digest the latest central banks’ announcements. The Federal Reserve (Fed) and the European Central Bank (ECB) decided to keep interest rates on hold in their last meetings of 2023, holding their fire for the third consecutive meeting, somehow confirming the end of monetary tightening without explicitly saying so. The outlooks and the accompanying statements, however, differed, as risk to inflation and growth seem higher in the Eurozone. Still, market players welcomed the decisions with increased risk appetite, maintaining the USD on the back foot despite the United States (US) encouraging macroeconomic data. As the new week starts, fresh comments from policymakers hit the wires. On the one hand, ECB Governing Council member Peter Kazimir said that the mistake of premature easing would be more significant than the risk of staying tight for too long. On the other… Read More »EUR/USD Forecast: Bulls hold ground as central banks’ dust settles

EUR/USD regained its traction after closing in negative territory on Friday. The pair’s near-term technical outlook suggests that the bullish bias stays intact. Euro could target 1.1000 once it clears 1.0950. EUR/USD closed in negative territory on Friday but still gained more than 1% in the previous week. Following a quiet Asian session on Monday, the pair regained its traction and rose toward 1.0950. Hawkish comments from New York Federal Reserve (Fed) President helped the US Dollar hold its ground ahead of the weekend and caused EUR/USD to erase a small portion of its weekly gains. Williams said that they were not currently discussing rate cuts and argued that the market may be overreacting. In the meantime, Chicago Fed President Austan Goolsbee said over the weekend that he did not rule out the possibility of a rate cut at the policy meeting in March and made it difficult for the USD to preserve its strength to start the new week. On the other hand, Reuters reported that the European Central Bank (ECB) policymakers were unlikely to consider a policy pivot before March. Citing seven sources familiar with the matter, the news outlet said that officials thought that it would be… Read More »EUR/USD Forecast: Euro looks to test 1.1000

The Federal Reserve’s (Fed) rate cut talk is getting chaotic and frankly, hard to follow. After the Fed signaled a possible end to its monetary policy tightening campaign and the European policymakers refused to adhere, some Fed members including John Williams and Raphael Bostic pushed back the Fed cut expectations. But anyway, investors could give the Fed doves the benefit of the doubt until Friday’s PCE data. The PCE, the Fed’s favourite gauge of inflation, is expected to show a further decline in both headline and core inflation. Elsewhere, the Bank of Japan (BoJ) will announce the year’s final policy verdict on Tuesday. The BoJ Governor Ueda’s comments, two weeks ago, that the BoJ’s policy would be hard to maintain from the year end had triggered expectations that the BoJ will finally say goodbye to negative rates. There is nothing more than a slim probability for the BoJ to exit negative rates this week, but investors are eager to hear further details about how and when the BoJ will leave the negative rate territory. Concrete details regarding the BoJ’s policy plans and/or changes in BoJ’s inflation outlook could cause swift moves in yen markets, which became very volatile since Ueda… Read More »Some Fed members push back on rate cut bets as BoJ meets [Video]