Global equity markets may face challenges in gaining ground early this week as the possibility of early interest rate cuts diminished in light of persistent inflationary pressures. While seasonal factors likely contributed to the inflationary trends, the uncertain state of the US economy has left macro traders in a cautious stance. With a relatively quiet week in terms of economic data, investors may find limited guidance in this regard. However, market participants will closely monitor statements from Federal Reserve officials, particularly in light of the recent overshoot in services inflation. This development may raise concerns within the Federal Reserve, especially considering Jerome Powell's apprehensions that services may not carry the baton once the disinflation effect of falling goods prices dissipates. Asia-Pacific markets opened mixed Tuesday as investors await an update on its key lending rates from China's central bank. As trading activity resumes in Asia on Tuesday and liquidity returns to normal post-US Presidents Day, investors will focus on whether Chinese markets can sustain their gradual recovery from recent lows and if Japan's stocks can reach levels not seen in over 30 years. The return of Chinese markets after the Lunar New Year break will be closely watched to gauge sentiment and investor appetite, especially amid ongoing concerns about the property and stock market slump. However, despite the solid official data indicating robust travel and spending during the Lunar New Year festivities, mainland Chinese equities did not experience significant gains when trading resumed after the holiday. Analysts were not swayed by what some Wall Street banks described as mediocre data, as they observed that tourist receipts declined by double digits compared to 2019 per capita. This suggests that investor sentiment is still affected by the prolonged property and stock market slump. The 1.2% gain in equities reportedly required ETF-buying by state funds late in the session, indicating intervention was required to support the market. Turnover in certain products, including funds tracking mid-sized and small firms associated with Beijing's support efforts, was notably high, a hallmark for recent state-supported rallies. At the same time, foreign investors were net sellers to the significant tune of 835 million real dollars. Many Asian countries struggle under tight financial conditions, especially those relying on US dollar-denominated funding. However, in Japan, financial conditions remain ultra-loose thanks to negative interest rates, booming stock markets, and a weaker JPY, where the dramatic wealth effect could stir inflation concerns in the halls of the Bank of Japan. Indeed, last week, Goldman Sachs' Japanese financial conditions index sank to a 34-year low. This underscores the sliding yen/booming stock market nexus and would appear to be inflationary. Could this be a catalyst to tip the scales for the Bank Of Japan to abandon yield curve Control, at a minimum? The upcoming 20-year bond auction in Japan on Tuesday is expected to attract heightened attention, particularly following the unexpected surge in demand witnessed from pension funds during a recent 10-year sale. This increased interest reflects a potential shift in sentiment among investors regarding longer-term Japanese government bonds. Moreover, Monday's auction of 12-month bills marked a significant development, with the first positive yield at auction since October 2014. This outcome signals a notable change in the prevailing market dynamics and underscores the evolving investor sentiment towards shorter-term Japanese government securities.

AUD/USD Current Price: 0.6538 Trading was choppy at the beginning of the week amid holidays in America. The Reserve Bank of Australia will publish the Minutes of its latest meeting. AUD/USD maintains its positive tone, aims to test the 0.6610 resistance level. The Australian Dollar benefited from the better tone of equities at the beginning of the week, posting modest gains against its American rival. AUD/USD traded as high as 0.6551, standing a handful of pips below the level ahead of the Asian opening. Activity across financial markets was limited amid holidays in the United States (US) and Canada, alongside a scarce macroeconomic calendar. Australia will open the macroeconomic calendar with the release of the Reserve Bank of Australia (RBA) Meeting Minutes. The central bank kept the Official Cash Rate (OCR) steady at 4.35% in its February meeting, and policymakers reiterated that they remain data-dependent. Additionally, officials maintained a mildly hawkish tone, indicating that "a further increase in interest rates cannot be ruled out."  The minutes could provide fresh clues on what the RBA Board plans to do next or even what policymakers need to feel more confident about inflation going down and begin trimming rates. Meanwhile, the People's Bank of China (PBoC) will announce its decision on Interest rates. The PBOC fixes the Loan Prime Rate (LPR) every month. AUD/USD short-term technical outlook The AUD/USD pair trades just below the 23.6% Fibonacci retracement of its latest daily slump measured between 0.6871 and 0.6442 at 0.6542. The 38.2% retracement of the mentioned decline comes at 0.6610, with a break above it required for a steeper recovery. Technically, the daily chart shows that a flat 100 Simple Moving Average (SMA) converges with a bearish 20 SMA, both near the mentioned Fibonacci resistance. At the same time, and despite the AUD/USD advancing for four days in a row, technical indicators remain directionless within negative levels, suggesting buying interest remains limited. In the near term, and according to the 4-hour chart, the risk skews to the upside despite a limited bullish momentum. AUD/USD develops above a bullish 20 SMA while meeting intraday buying around a flat 100 SMA. Technical indicators, in the meantime, eased from their recent highs but remain within positive levels with limited downward strength.   Support levels: 0.6500 0.6465 0.6430 Resistance levels: 0.6545 0.6580 0.6610 

Quiet start, but Nvidia earnings provide highlight of the week ahead. UK Rightmove HPI gains 0.9% in February. Markets continue to question rate pathway after recent inflation data. European markets have stumbled into a new week, with the habitual record highs set for the likes of the DAX and CAC holding off for the time being. Today brings a relatively quiet session for global markets, with national holidays in the US and Canada coming alongside a lack of any notable US earnings or economic data. Nonetheless, today's slow start belies the excitement ahead as AI posterchild Nvidia gear up to provide one of the most hotly anticipated reports of the quarter on Wednesday. Coming off the back of particularly impressive earnings and performance from Arm Holdings, bulls will hope that Nvidia can post numbers that continue to justify the lofty valuations that come with a stock that has gained 47% since the start of the year. The UK housing market came back into focus this morning, with the Rightmove House Price Index gaining another 0.9% in February. Coming off the back of a year that saw growing concerns that rising borrowing costs would result in a collapse within house prices, the strength seen over recent months help lift expectations that 2024 will bring higher transactions and valuations. With strong wage growth lifting average earnings, the housing market looks primed for a potential boost once the Bank of England normalise interest rates over the course of the year. Coming off the back of a week that was dominated by inflation data from the US and UK, market expectations around the monetary pathway for both the BoE and FOMC remains uncertain. Rising yields have highlighted the pushback after the initial expectations of a whopping seven rate cuts from the FOMC this year. Instead, it looks like the ECB and BoE could lead the way this year, with European disinflation set to ramp up over the coming months.  

XAU/USD Current price: $2,016.16 Most Asian and European indexes edged higher, indicating a better market mood. Financial markets await fresh clues from the Fed after hotter-than-expected US inflation. XAU/USD advances for a third consecutive day, could recover beyond $2,030. Spot Gold advanced throughout the first half of Monday amid absent demand for the US Dollar, resulting in XAU/USD extending its recovery to $2,023.04 a troy ounce. The Greenback found some near term demand by the end of the European session, with the pair currently trading at around $2,016, holding on to modest intraday gains. The week started in slow motion at the FX board as the macroeconomic calendar had little to offer, while holidays in Canada and the United States (US) weighed down the market volatility. However, Asian and European indexes provided interesting clues for speculative interest.  Chinese shares rose following the long New Year holiday, while the Nikkei 225 flirted with record highs, to end the day with modest losses. Across the pond, EU markets posted a mixed performance, with most indexes closing with modest gains, also holding near record levels. Financial markets seem to have digested the latest US inflation figures indicating heating price pressures in the worlds' largest economy. Both the Consumer Price Index (CPI) and the Producer Price Index (PPI) rose by more than anticipated in January, diluting the odds for a soon-to-come rate cut. Market participants are now waiting for the Federal Open Market Committee (FOMC) Meeting Minutes, to be released next Wednesday. The document could provide clues on a May potential cut, and trigger some volatile price action. XAU/USD short-term technical outlook XAU/USD is neutral, according to technical readings in the daily chart. The pair met sellers around a mildly bearish 20 Simple Moving Average (SMA), while extending its recovery from a bullish 100 SMA after testing it last week.  Technical indicators, in the meantime, lack directional strength just below their midlines, suggesting easing buying interest. In the near term, and according to the 4-hour chart, XAU/USD could recover further, particularly if it resumes its advance beyond the daily high. Technical indicators have corrected lower after nearing overbought readings, but remain well above their midlines with moderated bearish strength. At the same time, the 20 SMA heads firmly north below the current level, providing dynamic support at around $2,005.20. Finally, the longer moving averages have lost their downward strength, but remain well above the current level. Support levels: 2,005.20 1,990.00 1,976.50 Resistance levels: 2,023.10  2,032.50 2,045.20

EUR/USD Current price: 1.0776 Asian and European stock markets pressure record highs, weighing on USD demand. Holidays in the United States and Canada limit volatility among major pairs. EUR/USD holds within familiar levels without clear directional strength. The EUR/USD pair seesaws around the 1.0770 level, confined to a tight range on Monday. A light macroeconomic calendar and holidays in the United States (US) and Canada limit the market volatility. US markets will remain closed amid Presidents Day, with no activity in stocks or bonds. During European trading hours, the German Deutsche Bundesbank released the Buba Monthly Report, a document providing a detailed analysis of current and future economic conditions from the bank's viewpoint. The news was discouraging, as it indicated the economy is likely in a recession, noting weak external demand, muted consumption, and cautious investments as the reasons behind the setback. On a positive note, Asian and European indexes maintain a positive momentum, reflecting prevalent confidence among market participants. This week's focus will be on the Federal Open Market Committee (FOMC) Minutes, to be released on Wednesday. The Federal Reserve (Fed) announced its decision on monetary policy late in January and cooled down expectations for a March rate cut, triggering panic among market players. The document may shed light on whether a rate cut will come in May. EUR/USD short-term technical outlook The EUR/USD pair has made no progress after closing two consecutive weeks around the current level. From a technical point of view, the risk skews to the downside, according to the daily chart. The pair develops below all its moving averages, and the 20 Simple Moving Average (SMA) is about to cross below the 100 SMA, both converging in the 1.0790 price zone. Technical indicators, in the meantime, are neutral-to-bearish within negative levels, suggesting absent buying interest. For the near term, the 4-hour chart shows EUR/USD is meeting sellers around a mildly bearish 100 SMA, while a bullish 20 SMA keeps heading north below the current level. At the same time, technical indicators have pared their slides, turning neutral within positive levels. The case for a bullish extension will be stronger if the pair extends its advance beyond the 1.0840 level. Support levels: 1.0740 1.0695 1.0650 Resistance levels: 1.0795 1.0840 1.0885 

EUR/USD edges higher toward 1.0800 to start the week. Technical buyers could take action once 1.0800 is confirmed as support. US markets will remain closed in observance of the Presidents' Day holiday. After closing the previous week marginally lower, EUR/USD gained traction early Monday and advanced toward 1.0800. In case the pair stabilizes above that level, it could extend its recovery in the near term. The data from the US showed on Friday that the Producer Price Index (PPI) rose at a stronger pace than expected in January. Although the immediate reaction provided a boost to the US Dollar (USD), the currency struggled to preserve its strength later in the American session.  The economic calendar will not feature any macroeconomic data releases that could influence EUR/USD's action later in the day. Germany's Bundesbank is scheduled to release its monthly report, which is likely to be ignored by participants. Stock and bond markets in the US will remain closed in observance of the Presidents' Day holiday on Monday. Hence, thin trading conditions could make it difficult for EUR/USD to gather directional momentum in the second half of the day. Later in the week, preliminary Manufacturing and Services PMI reports from Germany and the Euro area will be scrutinized by investors. EUR/USD Technical Analysis The Relative Strength Index (RSI) indicator on the 4-hour chart rose to 60, pointing to a bullish tilt in the short-term technical bias. 1.0800 (Fibonacci 23.6% retracement of the latest downtrend, psychological level) aligns as key resistance for EUR/USD. In case the pair climbs above that level and confirms it as support, 1.0850-1.0860 (200-period Simple Moving Average (SMA), Fibonacci 38.2%retracement) and 1.090 (psychological level, Fibonacci 50% retracement) could be seen as next bullish targets. On the downside, first support area seems to have formed at 1.0760-1.0750 (50-period SMA, 20-period SMA) ahead of 1.0700. This article was corrected at 08:05 GMT to say in the second bullet point "technical buyers could take action once 1.0800 is confirmed as support," not resistance.