EUR/USD continues to fluctuate near 1.0950 for the second straight day. The pair remains stuck between the 100- and 200-period SMAs on the 4-hour chart. The economic calendar will not offer any high-impact data releases. EUR/USD is having a difficult time finding direction for the second consecutive day on Tuesday and extending its consolidation near 1.0950.

The financial markets are currently pricing in sharp interest rate cuts over the course of the year. In reality, however, the last mile in reaching the inflation target will be challenging and will determine the future interest rate path. Increased volatility is therefore to be expected on the bond market. We consider US government bonds to be attractively valued. The general yield level makes bond investments interesting. In the case of corporate bonds, we favour bonds in the BBB rating segment. The global equity markets should also achieve gains in the 1st quarter. Economy Despite a slowdown in the 4th quarter, the US economy is still solid and thus largely unaffected by the sharp rise in interest rates and real wage losses since 2022. However, the support provided by accumulated savings could soon run out, although rising real wages should also favour the economy this year. We therefore expect only a slight slowdown in growth this year. Inflation should continue to fall over the course of the year. However, the extent of this will depend on the price momentum for services. We only expect GDP growth of +0.7% in the eurozone in 2024. Over the course of the first half of the year, slight impetus should come from industry. Private consumption will benefit from real wage increases and a robust labour market this year. The inflation rate has fallen significantly in recent months, but we expect a more volatile trend in the first half of 2024. The last mile on the way to achieving the inflation target will be challenging. The ECB will focus on the development of wages and corporate profits. Bonds We expect the first interest rate cut in the US in July. A moderate slowdown in the US economy should increasingly remove the basis for inflation and a further fall in inflation should then trigger swift interest rate cuts. Overall, we are forecasting -100 bp by December. The bond market is currently pricing in stronger interest rate hikes and is very volatile. We expect further swings as uncertainty will remain high. The ECB should begin slowly cutting interest rates from June onwards due to the still quite high core inflation. We do not expect a rapid normalisation of interest rate policy until after September as price pressure eases. German government bonds have been volatile in recent months and have thus followed the direction set by the USA. The expected economic recovery should cause yields on medium and longer maturities to rise slightly. We consider short maturities to be attractive. Currencies The expected moderate recovery of the eurozone economy and slight slowdown in growth in the US should support the euro against the US dollar. We are also forecasting a strengthening of the euro against the Swiss franc. Gold will benefit from the expected interest rate cuts in the 1st quarter. Equities In view of the strong sales and earnings growth forecast for 2024, we expect the global equity market index to grow moderately in the 1st quarter, in a range between 0% and +5%. We favour quality stocks from the healthcare, technology and consumer sectors. Download The Full Global Strategy

Good Morning! Dollar Index can trade within 102-103 while Euro could rise towards 1.10 while above 1.0870-1.09. EURJPY and USDJPY have declined sharply and could be bearish towards 157 and 143 respectively. USDCNY could rise slowly towards 7.18/20 while above 7.10/12. Aussie could be trading within 0.6650-0.6750 for the next few sessions while Pound could rise towards 1.28 or higher in the near term. USDRUB could trade within 90-92 for the next few sessions while EURINR may hold within 90.50-91.50. USDINR needs to rise from 83 else could break lower to test 82.90 before the expected rise is seen. The US Treasury yields have dipped slightly. The yields can rise further from here to test their resistances. Thereafter the overall downtrend can resume. The US CPI data release on Thursday will be important to watch.The German yields remain stable. Near-term view is positive to see a rise from here before reversing lower again. The 10Yr and 5Yr GoI are coming down as expected. Bias is negative to see more fall going forward. Dow Jones has risen back sharply but needs to rise above 37800 to negate the danger of falling. DAX has risen further and may look to rise more from here. Nifty has come down sharply but the levels of 21500-21400 can lend some support and keep intact our bullish view. Nikkei has risen towards its upper end of the range as expected. Need to see if a break happens on the upside or not. Shanghai has bounced back and if sustains, can rise further towards its immediate resistance. Crude prices look mixed and can continue to trade sideways for a while. Gold and Silver can fall while below 2060 and 23.50 respectively. Copper has bounced back but could face rejections from 3.85-3.88. Natural Gas might break above 3.00 and target further upside. Visit KSHITIJ official site to download the full analysis

Gold price rebounds from three-week lows as the focus shifts to US inflation data.  The US Dollar struggles with US Treasury bond yields amid mixed Fedspeak and a better mood. Gold price eyes a meaningful recovery above the 21-day SMA at $2,043 amid a Bull Cross.   Gold price is back in the green early Tuesday, building on the turnaround from three-week lows of $2,017 set on Monday. The US Dollar (USD) is holding its pullback amid a better market mood and a modest uptick in the US Treasury bond yields. Gold price benefits from softer US inflation expectations Risk sentiment remains in a firmer spot, as Asian equities track the Wall Street tech rally, endorsed by renewed hopes of aggressive interest rate cuts by the US Federal Reserve (Fed) later this year. The dovish Fed expectations were reinforced after the New York Fed's latest Survey of Consumer Expectations showed Tuesday that US consumers' projection of inflation over the short run fell to the lowest level in nearly three years in December. The US Dollar snapped its winning run and pulled back sharply from three-week highs against its major rival currencies, tracking the sell-off in the US Treasury bond yields on softer US inflation expectations-induced bets for a slew of Fed rate cuts this year. Markets are currently pricing in about 61% odds of a March Fed rate cut, up from a 55% chance seen following the release of the upbeat US Nonfarm Payrolls (NFP) report. Friday's NFP data showed that the US economy added 216K jobs in December, beating the market forecast of a 170K increase. The US Dollar rallied to fresh multi-week highs on strong US labor market report and less dovish Fed commentaries, weighing negatively on the Gold price. Fed Governor Michelle Bowman said on Monday that "inflation could fall further with policy rate held steady for some time." Atlanta Federal Reserve (Fed) President Raphael Bostic said that he expects two 25 basis points (bps) rate cuts by year-end 2024. All eyes now turn to Thursday's US Consumer Price Index (CPI) data, which will help revertebrate the market's pricing for the Fed rate cuts, impacting the US Dollar and Gold price valuations. The US CPI is forecast to rise at an annual pace of 3.2% in December, up slightly from a 3.1% increase in November. The Core CPI inflation is set to decline to 3.8% YoY in the reported period versus 4.0% in November. In the meantime, the broader market sentiment and the Fed expectations will continue to influence the price direction of the US Dollar-denominated Gold. Gold price technical analysis: Daily chart The near-term technical outlook for Gold price remains slightly in favor of buyers but acceptance above the 21-day Simple Moving Average (SMA) at $2,042 holds the key. The next upside target for Gold price is envisioned at Friday's high of $2,054, above which doors reopen for a test of the $2,100 barrier. The 100-day Simple Moving Average (SMA) closed above the 200-day SMA on Friday, validating an impending Bull Cross. The 14-day Relative Strength Index (RSI) indicator is looking to recapture the midline, suggesting that a meaningful Gold price recovery could be in the offing. On the downside, the initial support is seen at the $2,015 confluence, where the 50-day SMA and the previous day's low converge. A daily closing below the latter is critical to resuming the downtrend toward the $2,000 mark.

Markets Stocks are displaying signs of recovery after a challenging start to the year. The S&P 500 and Nasdaq Composite are notably in positive territory, with investors springing to life, driven by the resurgence of large technology stocks. The 10-year yields spent most of the day trading below 4%, contributing to the positive sentiment. While the week was expected to start quietly, traders quickly regained confidence, especially ahead of Thursday's release of the US Consumer Price Index (CPI). If current cooling estimates hold, the month-on-month increase is anticipated to be 0.3%, marking the slowest pace of annual core price growth since May 2021. This is expected to be perceived positively for risk markets, reinforcing the optimism for market-based rate cuts. A clean read from Friday's data was not readily ascertainable for a consensus "group think," with some flying blind while others saw a crystal clear soft landing path; hence, markets were clearly unclear to start the week. Nonetheless, it would be reasonable to argue that the overall evidence from Friday's data tends to lean more towards signalling economic deceleration in a Goldilocks type of way. With growth and inflation remaining subdued, the emerging picture suggests a Federal Reserve that is normalizing and likely to cut rates this year, possibly as soon as March or May if inflation cooperates. The critical debate now revolves around the pace and intensity of this follow-through. Thursday's US CPI report is anticipated to be crucial in providing further insights. Still, the market's reaction to consensus or slightly below prints remains uncertain, especially with softer inflation whisper numbers circulating. For index investors, maintaining harmony could still be a precarious struggle. The current situation for stocks is slippery, with little support expected from near-term growth. There's a dilemma: if the economy slows down, it could adversely affect earnings growth, but if the economy accelerates, it might delay rate cuts and impact richly valued tech stocks and other stock multiples. The key is finding the perfect equilibrium —economic deceleration that keeps inflation in check and aligns with the Federal Reserve's rate-cut trajectory without cliff-edging into a hard landing scenario. It's akin to the Goldilocks scenario, where everything needs to be pinpointed for the market's optimal performance. Oil market The oil prices plunged, racking losses between 3% and 4% after Saudi Aramco significantly reduced official selling prices for its crude oil for February delivery across all markets. Weak demand fundamentals influenced this decision in the global physical oil market. While the price cuts were widely anticipated, they turned out to be larger than analysts had forecasted. Asia refiners were applying pressure for competitive cargoes from Saudi Arabia, which were at a premium compared to crude oil supplied from other regions. This move by Saudi Aramco is also interpreted as an effort to regain lost market share amid steep production cuts implemented by OPEC+. Non-OPEC supply, particularly from the US, has filled the void of reduced OPEC+ production.

European markets head lower after mixed US jobs report. Inflation dominates in the week ahead. Fourth quarter earnings season kicks off this week. Equity markets have continued to struggle as we kick off another week afresh, with European and Asian stocks heading lower once again. Friday's US jobs report brought fresh concerns over the likeliness of the Fed to cut rate in March as markets have been widely anticipating, with a hot payrolls figure coming alongside a higher wage growth reading. However, the breakdown highlighted that much of that job growth came from those taking on part-time work, with full time jobs moving sharply lower. With a sharp decline in the ISM services PMI, job growth propped up by part-time roles, and a higher unemployment rate, we have seen markets return to the view that March will see the Fed commence their easing cycle. This week brings a major focus on inflation, with tonight's Tokyo CPI figure kicking off a period that also sees Australian, US, and Chinese consumer prices reported. Coming at a time where markets remain under pressure over fears that we may see the Federal Reserve push back over the current trajectory expected by markets, the ability to maintain the downward trajectory for inflation is key to the health of the market. The commencement of the fourth quarter earnings season brings a fresh source of directional bias for markets, with traders watching closely for early signs over US consumption in the festive period. The overreliance on big tech highlights the importance of a strong showing this quarter, with AI earnings once again likely to dominate as traders attempt to gauge the potential size and growth rate of this new innovation. This week will be dominated by the big banks, with many hitting long-term highs as concerns of a hard landing ease. This could allow them to save money as funds set aside for bad loans are freed up. With a soft landing allowing the Fed to cut rates at a slower pace, it could be the banks that benefit from a more hesitant approach from Powell & co. Nonetheless, with many banks sitting on massive unrealized losses thanks to the unexpected surge in bond yields, the typical view that banks want higher rates has been challenged over recent years.