XAU/USD Current price: 2,029.70 A better market mood undermined demand for the US Dollar in the American session. Investors await a United States inflation update and lift bets on a March rate cut. XAU/USD sees a limited bullish potential, has room to pierce the $2,000 mark. The US Dollar came under selling pressure during American trading hours, helping XAU/USD trim a good part of its early losses. The bright metal trades around $2,030 a troy ounce after falling to $2,016.61, its lowest since mid-December. Financial markets recovered their optimism with Wall Street's opening, as investors resumed betting the Federal Reserve (Fed) would cut rates as soon as March. Furthermore, a report from Bank of America indicates its analysts believe the central bank may begin tapering the massive Treasury holdings by the same time. Government bond yields retreated, with the 10-year Treasury note currently yielding 3.97%, down 6 basis points (bps). The 2-year note offers 4.31%, down 7 bps. Stocks, in the meantime, trade mixed. Most United States (US) indexes stand in the green, but the Dow Jones Industrial Average is down 35 bps or 0.09%. Market participants await a US inflation update. The country will release the December Consumer Price Index (CPI) next Thursday,  foreseen at 3.2% YoY, above the previous 3.1%. The core annual reading, on the contrary, is expected to ease to 3.8% from 4% in November. XAU/USD short-term technical outlook The daily chart for XAU/USD shows that the risk skews to the downside. The bright metal trades below a flat 20 Simple Moving Average (SMA) while the 100 and 200 SMAs converge around $1,962 with modest upward strength. The Momentum indicator turned flat and consolidates around its 100 level, while the Relative Strength Index (RSI) indicator offers a bearish slope at 49, anticipating another leg lower without confirming it. The 4-hour chart shows technical indicators bounced from their recent lows but remain within negative levels, limiting the odds for a firmer recovery. At the same time, XAU/USD battles with a directionless 200 SMA while the 20 SMA heads south above the current level, providing dynamic resistance around the $2,040 level. Support levels: 2,016.60 1,998.65 1,987.20 Resistance levels: 2,040.20 2,052.30 2,065.45

EUR/USD Current price: 1.0945 The focus this week will be on the United States Consumer Price Index. Mixed European data fell short of spurring directional movements. EUR/USD is technically neutral around 1.0940, bulls need to reconquer 1.1000. The EUR/USD pair trades uneventfully around its daily opening, trading in the 1.0940 price zone ahead of Wall Street's opening. The pair struggles for direction, confined to familiar levels since last Wednesday. Speculative interest assessed the previous week's United States (US) employment-related figures, which generally stronger than anticipated. The numbers spurred doubts about when the Federal Reserve (Fed) could proceed with the first rate cut, but in the end, investors maintained bets on a March cut, limiting US Dollar gains. This week, the focus will be on inflation, as the United States will publish the  December Consumer Price Index, foreseen at 3.2% YoY, above the previous 3.1%. The core annual reading, however, is expected at 3.8%, easing from 4% in November. The macroeconomic calendar has been quite busy during European trading hours, as Germany reported the November Trade Balance, which posted a seasonally adjusted surplus of €20.4 billion, beating expectations. Additionally, Factory Orders increased a modest 0.3% in the same month, below the 1.0% anticipated by market players. The Eurozone unveiled January Sentix Investor Confidence, which resulted in -15.8, while Retail Sales fell 0.3% MoM. The American session will bring no relevant data, although some Fed speakers will be on the wires. EUR/USD short-term technical outlook The daily chart for the EUR/USD pair shows it remains pretty much neutral for a fourth consecutive day. The 20 Simple Moving Average (SMA) maintains its bullish slope but acts as dynamic resistance around 1.0970. The longer moving averages, in the meantime, remain directionless, far below the current level, while technical indicators head nowhere around their midlines, reflecting the absence of directional interest. In the near term, and according to the 4-hour chart, EUR/USD is also neutral. The pair trades around a flat 20 SMA, while a directionless 200 SMA provides intraday support at around 1.0920. Finally, technical indicators are flat around their midlines, in line with the absence of a clear directional interest. Support levels: 1.0920 1.0885 1.0840   Resistance levels: 1.0970 1.1015 1.1060

EUR/USD fluctuates near 1.0950 to start the new week. A negative shift in risk mood could make it difficult for EUR/USD to gain traction. 1.0920 aligns as a key support in the near term. EUR/USD managed to erase its daily losses after dipping below 1.0900 on Friday but closed the first week of 2024 in negative territory. The pair's near-term technical outlook fails to provide a directional clue in the near term and investors are likely to pay close attention to risk perception in the absence of high-tier macroeconomic data releases. Mixed macroeconomic data releases from the US caused EUR/USD to fluctuate wildly in the American session on Friday. After losing nearly 50 pips and dropping below 1.0900 with the immediate reaction to the December jobs report, the pair made a sharp U-turn and advanced to the 1.1000 area. Nonfarm Payrolls in the US rose by 216,000 in December. Although this reading came in better than the market expectation for an increase of 170,000, downward revisions to November and October prints caused the US Dollar (USD) rally to remain short-lived. Additionally, the Unemployment Rate held steady at 3.7% even as the Labor Force Participation Rate declined to 62.5% in December from 62.8%. Finally, the ISM Services PMI slumped to 50.6 in December from 52.7 in November, highlighting a loss of momentum in the service sector's business growth. US stock index futures trade in negative territory early Monday on escalating geopolitical tensions and fears over the debt crisis in China's property sector spilling into the broader financial sector. A bearish opening in Wall Street could help the USD stay resilient against its rivals in the second half of the day. The European economic docket will feature Retail Sales for November and business sentiment data for December. Earlier in the day, the data from Germany showed that Factory Orders increased by 0.3% on a monthly basis in November. This reading fell short of analysts' estimate for a 1% growth but failed to trigger a noticeable market reaction. EUR/USD Technical Analysis The Relative Strength Index (RSI) indicator on the 4-hour chart recovered toward 50, pointing to a loss of bearish momentum. EUR/USD, however, stays dangerously close to 1.0920, where the 200-period Simple Moving Average (SMA) is located. Below this level, 1.0890 (lower limit of the ascending regression trend channel) could act as next support before 1.0850 (Fibonacci 38.2% retracement of the latest uptrend). On the upside, 1.0980 (100-period SMA) could be seen as the first resistance before 1.1000 (psychological level, 50-period SMA) and 1.1050 (mid-point of the ascending channel).

Gold price meets with a fresh supply after Friday's post-NFP two-way volatile price swings. Diminishing odds for a more aggressive Fed policy easing exert pressure on the XAU/USD. A softer risk tone could help limit losses ahead of the US consumer inflation on Thursday. Gold price (XAU/USD) comes under some renewed selling pressure on the first day of a new week and drifts back closer to over a two-week low touched in the aftermath of the better-than-expected US monthly jobs data on Friday. The popularly known NFP report showed that the US economy added 216K new jobs in December as against the 170K anticipated and the previous month's downwardly revised reading of 173K. Additional details showed that the Unemployment Rate remained unchanged at 3.7% and the annual wage inflation, as measured by the change in the Average Hourly Earnings, climbed to 4.1% from 3.9% in November. The data points to a still-resilient US labor market and gives the Federal Reserve (Fed) more headroom to keep rates higher for longer, which remains supportive of elevated US Treasury bond yields and is seen undermining the non-yielding yellow metal. That said, the Institute for Supply Management (ISM) reported that business activity in the US services sector, which accounts for more than two-thirds of the economy, slowed considerably in December. In fact, the ISM Non-Manufacturing PMI fell to its lowest level since May and came in at 50.6 for December, down from 52.7 in the previous month. Adding to this, a measure of services sector employment plunged to 43.3 last week and registered its lowest reading since July 2020. This reaffirmed market bets that the Fed could start easing its monetary policy as early as March. Moreover, the current market pricing indicates a cumulative of five 25 basis points (bps) rate cuts for 2024, which holds back the US Dollar (USD bulls from placing fresh bets. Apart from this, a generally weaker tone around the equity markets might lend some support to the safe-haven Gold price. Meanwhile, the recent comments by Fed officials raised uncertainty over early interest rate cuts and might keep a lid on any meaningful recovery for the XAU/USD in the absence of any relevant market-moving economic data from the US. Richmond Fed President Thomas Barkin last Wednesday expressed confidence that the economy is on its way to a soft landing and said that rate hikes remain on the table. Dallas Fed President Lorie Logan noted on Saturday that the US central bank may need to continue raising its short-term policy rate to keep a recent decline in long-term bond yields from rekindling inflation. Traders now look to a scheduled speech by Atlanta Fed President Raphael Bostic for some impetus, though the focus will remain on the US consumer inflation figures on Thursday. Technical Outlook From a technical perspective, some follow-through selling below the $2,024 area, or over a two-week low touched on Friday, will expose the 50-day Simple Moving Average (SMA) support near the $2,012-$2,011 region. This is closely followed by the $2,000 psychological mark, which if broken decisively will be seen as a fresh trigger for bearish traders and pave the way for deeper losses. The Gold price might then accelerate the slide towards the $1,988-1,986 intermediate support en route to the December swing low, around the $1,973 area and the $1,962 confluence, comprising the 100- and 200-day SMAs. On the flip side, the $2,044-$2,045 zone now seems to act as an immediate hurdle, above which the Gold price could climb back to the post-NFP peak, near the $2,064 region. Any subsequent move-up might continue to attract fresh sellers and remain capped near the $2,077 area. That said, a sustained strength beyond will negate any near-term negative outlook and allow bulls to aim back to reclaim the $2,100 round figure.

US CPI inflation is the next big test for the US Dollar. Yen traders turn to Tokyo CPIs and wages for BoJ exit hints. China's inflation and trade numbers to impact broader sentiment. UK monthly GDP on tap amid recession fears. Will the US CPIs corroborate the market's implied Fed rate path? The US dollar staged a decent recovery during the first week of the year, with market participants scaling back some basis points worth of rate reductions expected by December, although the total number of rate cuts anticipated by investors is still way larger than the amount of rate cuts indicated by the Fed's December dot plot. At that gathering, the median dot for 2024 was revised down to 4.6% from 5.1% and Fed Chair Jerome Powell appeared more dovish than anticipated at the press conference following the decision. He said that rate increases are not the base case anymore and that the question now is "when will it become appropriate to begin dialing back?" With that in mind, at some point last week, investors were nearly fully convinced that a 25bps cut will be delivered in March and that interest rates should be lowered by 160bps by December. Now that number stands at around 140 and the probability of a March cut is down to around 70%. Next week, investors will stay locked in front of their screens in anticipation of the US CPI numbers for December, due out on Thursday. Inflation has come down quickly in recent months due to weaker goods prices and moderating costs of services, including travel, even as rent increases remained elevated. Headline inflation saw a faster slowdown than underlying price pressures as energy prices began drifting south in September, erasing nearly all the gains posted during the summer months. However, with the 2022 downtrend now dropping out of the year-on-year calculation, oil prices are close to their opening levels for 2023, which means that the y/y change has moved from well into negative territory close to zero. And with the headline CPI rate resting well below the core one, even if the latter softens a bit more, this means that there are risks for a rebound in headline inflation. Should this be the case, investors may further reconsider whether March is the appropriate time for a first rate reduction by the Fed, lowering the probability for that happening even further and scaling back more basis points worth of cuts for the whole year. Consequently, the US dollar could extend its recovery as Treasury yields edge higher. When will the BoJ take rates out of negative territory? Japan's Tokyo CPI and wage data, due out on Tuesday and Wednesday respectively, may also attract special attention next week. At its December gathering, this Bank decided unanimously to keep interest rates untouched at -0.1% and to stick to its yield curve control policy framework that places an upper bound of 1% for the 10-year Japanese government bond yield as reference. With the Bank giving no signals that the era of ultra-loose policy conditions is nearing its end, next week's releases can very well upset opinions on that front. The Tokyo CPI data for November revealed notable slowdowns in both headline and core consumer prices, with the latter rate hitting 2.3% y/y, slightly above the Bank's objective of 2%. Therefore, further cooling could point to a similar reaction in the national CPI data for the month and may suggest that Japanese policymakers are not in a rush to take interest rates out of negative territory, thereby further hurting the recently wounded yen. As for wages, they have accelerated to 1.5% y/y in October from 0.6%, but even if next week's data reveals that the positive trend continued in November, the Bank may prefer to wait for the outcome of the spring wage negotiations before ending the negative-rate era. In October, Japan's umbrella labor union, Rengo, said that they will demand hikes of at least 5%, which could take real wage growth into positive territory. Therefore, April seems a better choice for the BoJ to raise interest rates. Considering that the market expects the Fed to cut interest rates by around 140bps next year, this may allow the yen to stay in an uptrend mode against its US counterpart, even if the latest slide continues for a while longer. Will the outlook for the Chinese economy get gloomier? With China's official manufacturing PMI for December signaling contraction for the third straight month, investors who are concerned about the state of the world's second largest economy may now turn their attention to China's CPI and trade data for the last month of 2023. In November, China slipped further into deflation and although its exports improved, its imports slowed notably, suggesting weak demand. Therefore, should this week's data corroborate...

From FX weekly, USD/JPY completed target at middle 143.00's from the open at 140.97. Highs traded to 143.88. USD/JPY's range trades from 144.03 to 143.53. Next week shorts target 142.54 then 142.04. JPY cross pairs all trade above most vital levels and holds USD/JPY downside progress. Overbought NZD/JPY and AUD/JPY will lead the way lower next week. GBP/JPY shorts must break 181.96 to target easily 182.29 then 180.67. EUR/JPY break 157.45 targets low 156.00's and CAD/JPY 107.48 targets middle 106.00's. EUR/USD massive supports are located at 1.0897, 1.0892 and 1.0874. If the past is prologue to EUR/USD's traditional trends from 1998 -2015 and 2014 to 2023 then EUR/USD achieves its significant low in January and trends higher for the year. EUR/USD dropped 146 pips for January. EUR/USD ranges from 1.0897 and 1.0892 to 1.1061. The 5 year average is located at 1.1158. We're long for next week to target 1.1022. GBP/USD 2 big lines above 1.2785 and the 5 year average at 1.2832. The 5 year average is safe and won't break next week. Overbought begins at 1.2736. GBP/USD ranges from 1.2585 and 1.2597 to 1.2785. AUD/USD trades from 0.6781 to 0.6652. Above 0.6781 trades overbought while 0.6652 s expected to hold next week. EUR/AUD higher must break 1.6389. Longs hold for next at 1.6180's. From Fx Weekly, GBP/AUD break above 1.8760 traded to 1.8863. Target completed for roughly 200 pips. Shorts target a break at 1.8770. Oversold GBP/NZD and EUR/NZD traded to 2.0300's highs and 1.7541 from 2.0100 lows and EUR/NZD 1.7300's. Overall Currency markets trade fairly neutral as we wait for a better price determination for next week longs and shorts.