XAU/USD Current price: 2,015.53 Federal Reserve´s Raphael Bostic repeated rate cuts may come in the third quarter. Wall Street shrugged off the negative tone of its overseas counterparts, posting modest gains. XAU/USD corrects near-term oversold conditions, bears hold the grip. Gold consolidates weekly losses, trading at around $2,015 a troy ounce. XAU/USD posted a multi-week low on Wednesday at $2,001.68, bouncing back amid a modest improvement in the market's mood. The US Dollar maintained its positive tone throughout the first half of the day as Asian shares fell, with Chinese headlines leading the way. Turmoil in the housing sector and tepid growth-related data suggest the economy is in worse shape than previously believed. Market players became more optimistic with Wall Street's opening, as United States (US) data was generally better than expected. Housing Starts and Building Permits were up more than anticipated in December, while Initial Jobless Claims printed at 187K in the week ending January 12, beating the 207K expected. On a negative note, the Philadelphia Fed Manufacturing Survey Index posted -10.6, worse than the expected -7 but improving from the previous -12.8. Meanwhile, Federal Reserve (Fed) officials fail to provide fresh clues. Different authorities hit the wires but made no fresh comments on the future of monetary policy. Fed's Bank of Atlanta President Raphael Bostic was maybe the most aggressive, reiterating he does not expect policymakers to cut interest rates until the third quarter of this year, a message he already delivered in previous appearances. XAU/USD short-term technical outlook XAU/USD is still at risk of falling. The daily chart shows that the bright metal develops below a mildly bearish 20 Simple Moving Average (SMA), while the 100 and 200 SMAs offer no directional clues well below the current level. At the same time, technical indicators have lost their bearish strength but remain well into negative territory, falling short of suggesting an interim bottom. In the near term, and according to the 4-hour chart, the recovery seems corrective. XAU/USD holds far below all its moving averages, with the 20 SMA heading firmly south below directionless longer ones. Finally, technical indicators are bouncing from oversold readings but with limited strength and still far below their midlines. The pair would need to recover at least beyond 2,049.20 to have a chance of recovering its bullish strength. Support levels: 2,001.60 1,988.60 1,973.00 Resistance levels: 2,017.50 2,033.10 2,049.20

EUR/USD Current price: 1.0882 ECB President Christine Lagarde will participate in a panel discussion in Davos. The United States will publish housing and employment-related data. EUR/USD at risk of falling further, support at around 1.0845. The EUR/USD pair trades little changed for a second consecutive day, changing hands at around 1.0880 ahead of the United States (US) opening. The trading range is limited, as EUR/USD peaked at 1.0906, while it met a bottom at 1.0876. The soft tone of Asian share markets limited the upside for the Euro, while demand for the US Dollar receded on the back of more stable government bond yields that put a halt to their latest rally. Chinese headlines weigh on the market mood after the country released tepid macroeconomic data, spiced with trouble in the housing sector. At the same time, a resilient US economy weighed down the odds for a March rate cut, further undermining the sentiment. Meanwhile, the Eurozone released the November Current Account, which posted a seasonally adjusted surplus of €24.6 billion, while Construction Output in the same month was down 1%. The American session will bring US Initial Jobless Claims, the Philadelphia Fed Manufacturing Survey, Building Permits and Housing Starts.  Also, European Central Bank (ECB) President Christine Lagarde will participate in a panel discussion titled "Uniting Europe's Markets" at the World Economic Forum in Davos. EUR/USD short-term technical outlook The daily chart for the EUR/USD pair shows it trades a handful of pips above a flat 200 Simple Moving Average (SMA), providing dynamic support at around 1.0845. The 20 SMA remains far above the current level, losing its bearish strength but still suggesting bears hold the grip. Finally, technical indicators lost directional strength but remain within negative levels, maintaining the risk skewed to the downside. The pair is at risk of falling further in the near term. EUR/USD develops below a firmly bearish 20 SMA, which extends its slide below the larger ones. The moving average attracts sellers, currently at around 1.0900. At the same time, technical indicators remain below their midlines, with uneven strength, anyway reflecting the absence of buying interest. Support levels: 1.0845 1.0800 1.0760 Resistance levels: 1.0900 1.0940 1.0980  

The eurozone as a whole is still struggling to break free from sluggish growth. And with numerous elections this year, efficient decision-making is becoming increasingly difficult. But some countries are doing quite a bit better than others. The war in Ukraine will soon enter its third year. New geopolitical events like the war in Gaza, tensions in the Red Sea, and the energy and green transition at home are still shaping the eurozone economy. Restrictive monetary policy, at least in the first months of this year, are weighing on the bloc's growth outlook. As are less expansionary fiscal policies. So, here we go again: another year of sluggish growth is in the offing, at best. While many of the external factors have and will continue to hit all eurozone countries, though not to the same extent, there are clearly some differences across the continent. So, let's start with those common features: the still-unfolding impact of the European Central Bank's rate hikes and potential new supply chain frictions. These are both growth-limiting. On the flip side, relatively solid labour markets and improving real wages could support growth. Where countries differ more significantly is, for example, around the energy transition and the share of industry and fiscal support, be it national or European. Contrary to past experience, reforms, relief and resilience will not come from the ECB, which is entirely preoccupied with getting inflation back to target. No, it will have to come from businesses, households and governments. Behavioural changes, different risk-taking, innovation and investments are only a few drivers that would improve the eurozone's growth outlook. We'll soon discover whether this super-election year in Europe will be a blessing or a curse. We've got six parliamentary elections in the eurozone this year, including the European Elections, plus three regional state elections of great importance in Germany. Political fragmentation is the most likely outcome of most elections. As a result, decision-making is becoming increasingly difficult, leading to more instability or faster government collapses. All in all, this is another year for Europe with lots of economic and political action, and we'll be following every twist and turn. Read the original analysis: EZQ Intro: Eurozone – Still caught between stagnation, transition and geopolitics

Investors continue to come back to their senses and the latter involves trimming the interest rate cut expectations that went ahead of themselves over the past few months. Yesterday, the Federal Reserve's (Fed) Beige Book survey suggested that resilient consumer spending during the holiday season helped propel the US economy, and another solid rise in the US retail sales confirmed that spending in the US didn't slow by the end of last year. The probability of a March cut fell to around 60% from around 80% at the start of the year. The market and the central bankers have started to move toward each other, even though the time gap between when investors price in the first cuts and when central bankers contemplate rate reductions should continue narrowing to find an optimal balance and that should involve a deeper downside correction in stock and bonds, and a further recovery in the US dollar. The euro gives back field, sterling is cautiously bid following surprise jump in UK inflation last month while the Aussie falls of the bed on soft China, soft domestic data and strong dollar. In energy, crude oil is better bid and the barrel of American crude is testing the $73pb – again this morning on the Red Sea tensions and on OPEC forecast that global oil demand will grow by a robust 1.8 mio barrels per day next year, exceed growth in supplies and keep the market in deficit. Solid floor is seen at $70bp.

EUR/USD ticks higher for the second straight day amid a modest USD weakness. Reduced bets for a March Fed rate cut should limit any meaningful USD decline. Mixed signals from ECB policymakers to cap the upside for the shared currency. The EUR/USD pair builds on the overnight bounce from its lowest level since December 13, around the 1.0845 region, which coincides with the 200-day Simple Moving Average (SMA) and gains some follow-through traction on Thursday. Spot prices draw support from a softer US Dollar (USD) and stick to modest intraday gains around the 1.0900 round-figure mark through the early European session. That said, the fundamental backdrop warrants caution for aggressive bullish traders and before positioning for any further appreciating move. The USD downtick could be attributed to some profit-taking following the recent run-up to over a one-month peak and is likely to be limited amid doubts over an early interest rate cut by the Federal Reserve (Fed). Against the backdrop of the recent hawkish remarks by Fed officials, the US Retail Sales data released on Wednesday pointed to a still-resilient consumer spending and suggested that the economy is in good shape. This gives the US central bank more headroom to keep rates higher for longer, which should act as a tailwind for the buck. Adding to this, a weaker risk tone could benefit the Greenback's relative safe-haven status and further contribute to capping the upside for the EUR/USD pair. The market sentiment remains fragile amid concerns about China's weak economic recovery and geopolitical tensions. Yemen-based Houthi rebels claimed their second attack this week on a US-operated vessel in the Red Sea and have threatened to expand attacks in response to the American and British strikes. This keeps investors on the edge and should lend some support to the USD. Bulls might also refrain from placing aggressive bets around the shared currency in the wake of mixed views on inflation and interest rates by the European Central Bank (ECB) policymakers. In fact, ECB President Christine Lagarde, during a discussion at the Bloomberg House in Davos on Wednesday, 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. The aforementioned fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the EUR/USD pair has formed a near-term bottom around the 1.0850-1.0845 region. Market participants now look to the release of the ECB Monetary Policy Meeting Accounts, which, along with Lagarde's comments at the World Economic Forum, will influence the Euro. Traders will further take cues from the US economic docket, featuring Initial Jobless Claims, the Philly Fed Manufacturing Index and housing market data. Technical Outlook From a technical perspective, the recent breakdown through a short-term trading range favours bearish traders. Moreover, oscillators on the daily chart have just started gaining negative traction and suggest that the path of least resistance for the EUR/USD pair is to the downside. Hence, any subsequent move-up is more likely to attract fresh sellers near the 1.0920 area or the trading range support breakpoint. Some follow-through buying, however, might trigger a short-covering rally towards the 1.0970-1.0975 region en route to the 1.1000 psychological mark. The latter should act as a key pivotal point, which if cleared will negate any near-term negative bias. On the flip side, the 1.0845 region, or the 200-day SMA, might continue to act as an immediate strong support. A convincing break below should pave the way for a slide towards the 1.0800 round figure. The next relevant support is pegged near the 100-day SMA, currently around the 1.0765 region, below which the EUR/USD pair could accelerate the downfall towards testing the December monthly swing low, around the 1.0725-1.0720 zone.

Investors continue to come back to their senses and the latter involves trimming the interest rate cut expectations that went ahead of themselves over the past few months. Yesterday, the Federal Reserve's (Fed) Beige Book survey suggested that resilient consumer spending during the holiday season helped propel the US economy, and another solid rise in the US retail sales confirmed that spending in the US didn't slow by the end of last year. On the contrary, the latest data printed its highest pace in three months. As such, robust economic data added to the thinking that, yes, maybe March is too early for the Fed to announce the first rate cut; there is no apparent reason for the Fed to rush to the rate cuts as early as in March. The Fed will likely start cutting in the H1 but March seems overly optimistic given the ongoing strength of the economic data. The probability of a March cut fell to around 60% from around 80% at the start of the year, the US 2-year yield advanced 25bp since the start of the week, the 10-year steadies above the 4%, the US dollar index is pushing higher, the S&P500 comes under fresh selling pressure near peak, and volatility is rising. Given how far the Fed doves and the market bulls pushed their rate cut bets over the past months, there is room for further downside correction in both stock and bond markets, and potential for a further recovery in the US dollar against most majors.   Davos vibes  Central bankers, bank CEOs and other influential figures continue to talk in Davos. They continue to push back on the interest rate cut expectations, they highlight the need to consider the upside risks for inflation due to the rising geopolitical tensions and they continue to warn that the market's optimism regarding the rate cuts may have the opposite impact on rate policies: too much optimism could delay the rate cuts. European Central Bank (ECB) Chief Christine Lagarde warned in Davos yesterday that overly optimistic rate cut expectations don't help the central banks' fight against inflation – as they loosen the financial conditions prematurely. She, however, hinted that the ECB will likely cut rates by, or in summer. And this was the first time we heard the ECB Chief loudly considering rate cuts.   The market and the central bankers have started to move toward each other, but the time gap between when investors price in the first cuts and when central bankers contemplate rate reductions should continue narrowing to find an optimal balance and that should involve a deeper downside correction in stock and bonds, and a further recovery in the US dollar.   Markets  The EURUSD tested the 200-DMA to the downside yesterday and price rebounds could be interesting opportunities for building fresh shorts targeting the 1.0770/1.08 range. Cable is better bid above the 50-DMA after a surprise rebound in the UK's December inflation numbers weakened the Bank of England (BoE) doves' hands yesterday. Cable is testing the 1.27 offers, with a limited upside potential, however, given that the Fed rate cut expectations are being cut, and when the Fed is in play, the other central bank expectations must wait their turn to speak up. In Japan, the USDJPY advanced to 148.50, a move that no one saw coming by the end of last year when the Bank of Japan (BoJ) normalization bets started fueling long positions in the Japanese yen. Data released this morning showed that the Japanese core machinery orders fell 5% in November, calling for a supportive BoJ, rather than a rate hike.   Earlier this week, China printed a 5.2% growth for last year - not a major achievement, mind you, as the 5% rebound from the pandemic crash matched nothing better than a meagre 2% growth compared to a non-Covid year. Industrial production was better than expected in December while retail sales grew slower. Chinese equities barely reacted to the news of a trillion-yuan worth stimulus earlier this week. The selloff in the CSI 300 accelerates as the focus remains on developing deflation and worsening property crisis. The Aussie feels the pinch of soft China, soft jobs figures and stronger US dollar. The AUDUSD sank below the 200-DMA and is preparing to test the 100-DMA, at 0.6510, to the downside. The AUDUSD outlook turns neutral from positive, the only thing that could slow the Aussie's selloff against the greenback is technical indicators hinting that the pair will soon step into the oversold conditions.   In energy, crude oil is better bid and the barrel of American crude is testing the $73pb – again this morning on the Red Sea tensions and on OPEC forecast that global oil demand will grow by a robust 1.8 mio barrels per...