EUR/USD Current price: 1.0948 United States markets will remain closed amid the Martin Luther King Day holiday. European data disappointed, limiting the bullish potential of the Euro. EUR/USD is neutral-to-bearish in the near term, likely to continue ranging. The EUR/USD pair trades uneventfully around its daily opening on Monday, with a scarce macroeconomic calendar and a holiday in the United States (US) exacerbating range trading. Investors take clues out of stocks' behavior, with European indexes currently trading in the red. Equities started the day with a positive tone amid persistent bets the US Federal Reserve (Fed) will go on with rate cuts this year, potentially triggering the first one in March. However, stock markets lost momentum and European indexes post modest losses at the time. Meanwhile, the US celebrates Martin Luther King Day. That means there will be no activity on Wall Street or in Treasuries. Data-wise, Germany published the December Wholesale Price Index, which slid 0.6% MoM. The Eurozone Trade Balance posted a surplus of €14.8 billion in November, while Industrial Production in the same month declined 6.8% YoY, much worse than anticipated. EUR/USD short-term technical outlook The  EUR/USD pair hovers around the 1.0950 level without clear directional strength. The pair has been range trading for over a week now, and the daily chart shows that the risk skews to the downside. The 20 Simple Moving Average (SMA) turned flat, providing dynamic resistance around 1.0980. The SMA has attracted sellers pretty much since the month started. Meanwhile, the 100 and 200 SMAs lack directional strength far below the current level, reflecting the absence of directional conviction. Finally, technical indicators develop within negative levels but head nowhere. In the near term, and according to the 4-hour chart, EUR/USD is neutral-to-bearish. It has been trading between directionless 100 and 200 SMAs for over two weeks, with a flat 20 SMA in between. Technical indicators stand below their midlines without enough strength to confirm another leg south. Support levels: 1.0920 1.0875 1.0830 Resistance levels: 1.0980 1.1025 1.1060  

EUR/USD consolidates slightly above 1.0950 amid a holiday-truncated week. Investors' bets for rate cut by the Fed in March remain persistent. The ECB is done with hiking interest rates for now. EUR/USD remained inside Thursday's trading range of 1.0930-1.1000 in the Friday's trading session. The upside remained caped as the European Central Bank (ECB) announced an end to the elongated rate-tightening regime while stubbornly higher consumer price inflation in the United States provided cushion at the downside. The pair continues to trade listless inside Friday's trading range on Monday due to an extended weekend in the US economy amid Martin Luther King Birthday. The major is struggling to catch action despite the surprisingly softer US Producer Price Index (PPI) report for December. Producers at factory gates rose annual prices of goods and services at a slower pace of 1.0% against 1.3% as anticipated by investors. The core PPI that excludes volatile food and oil prices decelerated sharply to 1.8% vs. consensus of 1.9%. Bets supporting a rate cut by the Federal Reserve (Fed) in the March monetary policy meeting are persistently upbeat despite policymakers are endorsing them atleast after the first-half of this year. Fed policymakers need more evidence to confirm that price pressures are progressively declining towards the 2% target before jumping to rate-cut cycle. This week, market participants will keenly focus on the monthly US Retail Sales data for December. Investors have projected that consumer spending rose at a higher pace of 0.4% against 0.3% growth in November. Apart from that, Fed's Beige Book will be in focus. EUR/USD Technical Analysis EUR/USD trades in an Ascending Triangle chart pattern on an hourly scale, which indicates a sharp decline in volatility. The upside in the major currency pair remains restricted around the psychological figure of 1.1000 while upward-sloping trendline plotted from January 5 low at 1.0877 is providing support to the Euro bulls. The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, which indicates a consolidation ahead. The upside journey in the major currency could resume if the asset manages to climb above January 11 high at 1.1003, which will allow it to recapture five-month high around 1.1120. A breach of the latter would open upside towards 19 July 2023 low at 1.1174. On the flip side, a sell-off could occur if the asset drops below January 9 low of 1.0910. This could trigger a downside move towards 22 November 2023 low at 1.0825 and 5 November 2023 high near 1.0756.    

It's another week marked by US holidays, with Wall Street observing Martin Luther King Day today, so markets are getting off to a rather sluggish start in Asia. That said, there is a lot of geopolitical and macro noise in the market, so it's probably not the time to get over complacent, especially with consumer sentiment apt to get held hostage to the gnarly geopolitical scrim as policymakers, companies and investors struggle to operate in today's highly politically charged environment. Given the market has moved all in on March's rate cuts after evident pipeline disinflation in the PPI data, traders will be intently focused on Federal Reserve discussions and significant data releases from the world's largest economy this week. However, no major narrative shake-up is expected. Of course, a more robust retail sales number could slightly push back the odds of a March rate cut by the Fed, but unless the print is of the home run variety and one that knocks it right out of the park, it is unlikely to be a decisive game-changer. Geopolitically, tension rises following more US airstrikes on Yemen over the weekend, and domestically, President Biden faces challenges in foreign policy on two fronts: the Middle East and Taiwan. Both of these issues could weigh negatively on Consumer Sentiment. Given that probability preliminary read on the University of Michigan, sentiment for January will be front and center in traders' minds. Recall consumer sentiment and confidence were relatively buoyant last month thanks partly to meaningfully higher asset prices and declining inflation expectations. Xi Jinping might be grimacing after Taiwan elected Lai Ching-te for president, marking a third term for the Democratic Progressive Party. Voter turnout was 70%. Lai, who served as vice president since 2020, succeeds Tsai Ing-wen, who stepped aside due to term limits. Lai's victory is seen as a rebuke to Beijing, as he has been labelled a "troublemaker" by pro-China factions and a supporter of Taiwan's independence from The Chinese Communist Party. Lai emphasizes the preservation of democracy and is expected to follow Tsai's approach in deepening Taiwan's ties with Washington without actively seeking confrontation with Beijing. China may view the election results as a step toward conflict, as Xi Jinping maintains that reunification with Taiwan is a historical inevitability. Federal Reserve speakers include Barr, Bostic, Bowman, Williams, and notably, Waller—twice. Waller's previous remarks hinted at a dovish pivot, emphasizing the importance of rate cuts as inflation falls. But his is nothing earth-shattering and simply part of the FED policy that says if you cut as inflation falls to avoid the real policy rate rising mechanically. Hence, the market has at least and probably more than 75 pb Fed cuts to work with, given the calmer PCE deflator, the key Fed. inflation gauge. With market hawks moving into "can't beat them join the mode," an odds-on 80% March rate cut probability has been packed into the short-term swaps market. Globally, attention will be on China's activity data, especially in light of CPI figures showing Chinese consumer prices in deflation for a third consecutive month in December. The People's Bank of China PBoC may consider a key policy rate cut, and China will also release GDP figures.  

Gold price builds on last week's recovery early Monday on cautious optimism. The Dollar drifts lower amid sluggish US Treasury bond yields and US holiday. Gold price closed the week above 21-day SMA at $2,045, where next? Gold price is sitting near the highest level in five days above $2,050 in Asian trading on Monday, helped by a cautiously optimistic market mood, increased US Federal Reserve (Fed) bets for a March rate cut and a US holiday-led thin trading conditions.   Gold price stays supported amid wobbly US Dollar Gold price is capitalizing on persisting uncertainty in the market, as investors digest a bunch of the latest fundamental developments at the start of the week on Monday. The US Dollar is fluctuating between gains and losses, as the US Treasury bond yields trade listlessly amid light trading on account of the Martin Luther King Jr. Day holiday in the United States. On Friday, the US Dollar slipped from higher levels after the US Producer Price Index (PPI) unexpectedly fell in December, ramping up Fed March rate cut bets while dragging US Treasury bond yields lower. Market pricing now points to a 78% chance that the US central bank will begin easing rates in March, as compared to a 68% chance a week ago, according to the CME Group's FedWatch tool. Dovish Fed expectations remain supportive of the ongoing upswing in the Gold price. Markets, however, prefer to stay on a cautious footing ahead of the crucial Gross Domestic Product (GDP) from China, especially after the People's Bank of China (PBOC) surprised markets with no reduction to the Medium-Term Lending Facility (MLF) rate. Further, simmering tensions between China and Taiwan also keep investors on edge and the US Dollar broadly supported. Over the weekend, Taiwan's ruling Democratic Progressive Party (DPP) won the presidential election while losing its legislative majority. US Secretary of State Antony Blinken sent Taiwanese president-elect William Lai a message of congratulations following the result. In response, China's Foreign Ministry said, "China firmly opposes the US having any form of official interaction with Taiwan and interfering in Taiwan affairs in any way or under any pretext." Fresh reports of Iran-backed Houthi militants launching an anti-ship cruise missile at a US Navy ship could also act as a tailwind for the Gold price.   Later in the day, Gold price could maintain its buoyant tone, in the absence of any significant economic data and amid light trading. The main focus this week remains on Fed Governor Christopher Waller's speech, US Retail Sales data and Chinese quarterly GDP numbers. Gold price technical analysis: Daily chart The short-term technical outlook for Gold price remains in favor of buyers after the bright metal closed Friday above the 21-day Simple Moving Average (SMA) at $2,046, breaking the weekly range trade to the upside. The 14-day Relative Strength Index (RSI) indicator is looking firmer above the midline, suggesting that there is more scope to the upside for Gold price. Additionally, the 100- and 200-day SMA Bull Cross remains in play, supporting Gold price.  The immediate resistance is seen at the January 5 high of $2,06, above which the static resistance at $2,080 will be tested. If the upbeat momentum sustains, a retest of the $2,100 barrier cannot be ruled out. However, if Gold sellers lurk at higher levels and trigger a pullback, the 21-day SMA resistance-turned-support at $2,046 will be the initial contention point. A daily closing below the latter is critical to negating the renewed uptrend. The next downside target is seen at the 50-day SMA at $2,019. Ahead of that, Friday's low of $2,027 could offer some temporary respite to Gold buyers.

Currency markets traded 100 and 200 pips last week and the current week is slated for a repeat performance. Serious underperformers were found in the anchor pairs as EUR/USD traded 90 pips, DXY 69, AUD/USD 87 and 112 pips for GBP/USD. Wide rangers traded an average achievement at 200 pips beginning with GBP/AUD at 217 pips, EUR/AUD at 199 and GBP/NZD at 168. Market prices remain trading in 100 and 150 pip ranges and bouncing inside vital averages. The anchor pairs are responsible to lead markets by vital average breaks  in order to restore expanded ranges and normally traded markets. Inside most currency prices is pure Noise which means nothing happens to the traded price as it fails to produce trend results and only trades in tiny ranges. Prices desperately  require signals and variation. The only 2 trade options available are short overbought JPY cross pairs as GBP/JPY, EUR/JPY, CAD/JPY and CHF/JPY. The second option is enter longs and shorts at vital levels. GBP/USD for example top line this week and reported every week is located at 1.2788 and 1.2832 at the 5 year average. A short trade prevailed every week for the past 5 weeks at the upper levels. GBP/USD ranges trade the same 5 week story from 1.2597, 1.2621 Vs 1.2788 and 1.2832  Same for EUR/USD at 1.0895 to 1.1061 and 5 year average at 1.1155.AUD/USD 0.6639 and 0.6778 and NZD/USD 0.6161 t0 0.6293. USD/JPY lows this week are located at 143.85 and 143.54. Targets are located closer to 143.85. JPY cross pairs short remains the best trades as GBP/JPY targets 183.51 and EUR/JPY 158.36. GBP/CAD and EUR/CAD begin the week deeply overbought. EUR/CAD traded 115 pips last week Vs SPX 500 at 102 points. Oversold CHF cross pairs for the week include AUD/CHF, NZD/CHF and CAD/CHF. Wide rangers GBP/NZD and EUR/NZD trade short this week as well as GBP/AUD and EUR/AUD. Inflation Upon last release 6 weeks ago, informed Inflation was oversold. Inflation traveled higher. The current range is 6.10 to 2.20 and 1.90. Releases are valued at 0.03 which means expect 0.01 and 0.02 announcements. The last release at 3.4 just barely gave us 0.03 instead of the normal 0.01 and 0.02. Assuming the 2% target trades by the next 7 releases at 6 weeks per announcement then 7 X 6 = 42 weeks. This means the target might achieve 2% by the end of 2024. The BOJ also informs to the same 2% target for Japan Inflation at end 2024. From 2%, Inflation travels higher into 2025. If the Fed's goal is cut interest rates when Inflation achieves 2% then we have a long long way for the first drop.

Financial markets lift bets of a Federal Reserve rate cut in March despite US CPI data. European Central Bank has no extra room for rate hikes, unconfirmed pivot here. EUR/USD is losing its bullish potential, but a stronger slide is not yet clear. The EUR/USD pair is ending the week pretty much unchanged in the 1.0950 region, with investors feeling a bit disappointed after assessing the latest economic developments. Throughout the first half of the week, financial markets lacked directional momentum amid a scarce macroeconomic calendar and United States (US) first-tier data scheduled for Thursday. Economic developments in the United States and the Eurozone The US Dollar traded with a soft tone ahead of the release of the US Consumer Price Index (CPI) as investors hoped soft figures would keep the Federal Reserve (Fed) on the rate cut's path. However, the numbers surpassed the market expectations. The December CPI rates printed at 0.3% MoM and 3.4% YoY, higher than November readings. Finally, core annual inflation declined from 4% to 3.9%, still above the 3.8% anticipated. The news initially triggered concerns about the Fed's potential rate cuts. The US Dollar surged alongside government bond yields as stocks turned negative. Yet after the dust settled, speculative interest reconsidered, and resumed betting on a rate cut as soon as next March. The CME FedWatch Tool shows a 70% chance of a 25 basis points (bps) cut then, against roughly 60% odds ahead of the release. Further helping sentiment to recover, the US Producer Price Index (PPI) released on Friday came in softer than anticipated. The PPI contracted 0.1% MoM and rose 1.0% from a year earlier in December. The core annual rate posted 1.8%, below the 2% previous and the expected 1.9%. Meanwhile, the Euro was unable to capitalize on early USD weakness. Mixed European data suggested the recovery path is still long. Comments from European Central Bank (ECB) representatives were mostly hawkish but failed to provide a boost to the shared currency. Among the most notorious comments, ECB policymaker and head of the Bank of France Francois Villeroy de Galhau said  a rate cut is on the table in 2024 "as long as underlying fundamentals don't deliver any unforeseen surprises." Also, he clarified the ECB will stand pat until inflation expectations are "solidly anchored" at 2%. The ECB has reached its monetary policy pivot despite no official confirmation on the matter. President Christine Lagarde may likely keep the door open to additional hikes and reaffirm the data-dependent stance. Still, given the poor macroeconomic conditions and persistent price pressures, a rate cut in the EU may be closer than what the market believes. Policymakers in the spotlight With monetary policy meetings still far away, comments from officials will be highly watched in the upcoming days in search of fresh clues on whatever central banks may do next. In the meantime, the upcoming week will be light in terms of macroeconomic releases. The US will publish December Retail Sales and the preliminary estimate of the January  Michigan Consumer Sentiment Index. Across the pond, the Eurozone will offer the final estimates of the  December German and the  EU Harmonized Index of Consumer Prices (HICP). EUR/USD technical outlook The EUR/USD pair seems to be losing the bullish strength witnessed in December. It stands at the lower end of the previous week's range, and not far from the January low set at 1.0876. Technical readings in the weekly chart reflect the lack of directional conviction. EUR/USD stands below a flat 200 Simple Moving Average (SMA), providing dynamic resistance at around 1.1150. Meanwhile, the 20 and 100 SMAs also lack directional strength, with the shorter one at 1.0766, a potential bearish target should the pair break the aforementioned monthly low. Finally, technical indicators head nowhere, although holding within positive levels. The bearish case should be firmer on a slide below the 1.0800 figure. The daily chart suggests that EUR/USD could come under fresh selling pressure in the upcoming sessions. The pair has met sellers around its 20 SMA throughout the week, with the indicator losing its former upward strength, now flat around 1.0980. At the same time, the 100 and 200 SMAs remain directionless, far below the current level. The Momentum indicator gains modest downward strength within negative levels, while the Relative Strength Index indicator remains directionless around 53, suggesting bearish interest is not yet enough. EUR/USD peaked at 1.1000 earlier in January, the level to beat to shrug off the sour tone. Still, the pair would need to extend its recovery beyond 1.1120 to turn bullish. In the middle, intraday resistance lies around 1.1060.