European inflation was higher than anticipated in December, according to preliminary estimates. The United States employment sector remains tighter than what the Fed wishes. EUR/USD battles to resume its bullish trend, increasing chances of a bearish breakout. The US Dollar kick-started the year on a strong footing, appreciating against most major rivals. The EUR/USD pair fell to 1.0876, further retreating from its late December peak of 1.1139, and heads into the weekend trading at around 1.0980. Financial markets returned from the winter holidays and are looking for fresh direction. Speculative interest took some profits out of the table after thin trading helped EUR/USD reach a multi-month high. But investors also chose to reduce bets on upcoming rate cuts after macroeconomic figures confirmed the economic contraction extended into December 2023, while inflation in the Eurozone remained elevated at the end of the year. Concerning macroeconomic developments On the one hand, S&P Global released the final estimates of its December Producer Manager Indexes (PMIs), which showed manufacturing and services output remained below 50 - the line that separates contraction from expansion- in the European Union (EU) and the United States (US). The latter published the official ISM PMIs, with the manufacturing index printing at 47.4 and the services one resulting in 51.4, which provides some support to the US Dollar. On the other hand, Germany unveiled the preliminary estimate of the Harmonized Index of Consumer Prices (HICP), which unexpectedly jumped to 3.8% YoY in December, according to preliminary estimates. At the same time, the EU HICP rose 2.9% in the year to December, much higher than the previous 2.4%. Finally, German Retail Sales plunged by 2.5% MoM in November, much worse than anticipated. Restricted growth but still high inflation could affect central banks' decisions. The idea of slower progress is welcome as long as it comes by the hand of easing price pressures. The aforementioned figures suggest the European Central Bank (ECB) should stick to the "higher for longer" mantra, as additional rate hikes risk a steep recession. Across the pond, however, the Federal Reserve (Fed) seems to be dealing with a slightly better situation, but macroeconomic figures are falling short of suggesting a rate cut in the first quarter of the year. Speaking of which, the Federal Open Market Committee (FOMC) unveiled the Minutes of the December meeting. Officials noted that "the policy rate is likely at or near its peak for this tightening cycle," not actually a surprise after three consecutive on-hold decisions. Also, the document showed policymakers believe a rate cut is possible in 2024 but gave no hints on when or how it might occur.    US labor market remains tight A critical clue on where the Fed is heading next came from the labor sector. The US published multiple employment-related figures, including the ADP survey and the Nonfarm Payrolls (NFP) report. ADP indicated that the private sector added 164K new positions in December, much higher than the 115K anticipated by market participants. The NFP report showed the country created 216K new jobs in December, while the Unemployment rate held steady at 3.7% according to the US Bureau of Labor Statistics (BLS), both readings beating expectations. Average Hourly Earnings climbed 4.1% YoY up from 3.9% in November. The upbeat report gave the US Dollar a near-term boost, as it means the Fed would need to maintain rates at current levels for longer than previously anticipated. The upcoming week will bring fresh clues on US price pressures. The country will release next Thursday the December Consumer Price Index (CPI), foreseen up by 0.2% MoM. On Friday, it will be the turn of the Producer Price Index (PPI) for the same month, expected to post a modest 0.2% monthly increase. EU November Retail Sales stand out in the European macroeconomic calendar. EUR/USD technical outlook From a technical point of view, the EUR/USD pair is ending the week with substantial losses, and while bears dominate, they are still lacking control. The weekly chart shows the pair met sellers around a flat 200 Simple Moving Average (SMA) late in December but develops far above mildly bearish 20 and 100 SMAs. Technical indicators, in the meantime, have turned marginally lower within positive levels, still far above their midlines. In the daily chart, however, the risk of another leg south has increased. EUR/USD is battling to recover above a bullish 20 SMA, which limits the upside at around 1.0950. A directionless 200 SMA provides support at around 1.0845, the first level to beat to the downside next week. Finally, technical indicators seesaw around their midlines, lacking clear directional strength. EUR/USD needs to recover the 1.1000 threshold to shrug off the negative stance, with resistance then at 1.1060 and 1.1120. Below 1.0900, the aforementioned 1.0845 is the immediate support level, with a break below it exposing...

GBP/USD started 2024 on a positive note. Auspicious results from the UK docket reinforced the upside bias in spot. The key 200-week SMA continues to cap the upside. Price action around the Pound Sterling (GBP) was highly influenced by the US Dollar (USD) dynamics in the first week of the new trading year, while market participants continued to shrug off the holiday mood. GBP/USD navigated choppy waters initially, although it made a U-turn and the pair managed to advance in the subsequent sessions, largely surpassing the 1.2700 barrier on Friday. Despite Friday's post-NFP knee-jerk reaction, the Cable and the rest of the risk-associated assets grabbed fresh oxygen and extended the positive streak for the fourth week in a row in response to the sudden change of heart around the Greenback. This was accompanied by a U-turn in US yields and increasing speculation of interest rate cuts as soon as in March. The week that was: GBP/USD now looks to revisit 1.2800 and beyond The weekly recovery in the quid followed firm prints from both Manufacturing and Services PMIs in the UK for the month of December, which somehow managed to offset the bullish momentum in the US Dollar that was happening at the same time. Additional encouraging data in the UK docket saw a recovery in house prices tracked by Halifax as well as a decent bounce in the Construction PMI during December. Gains in the Cable, in the meantime, were bolstered by the resurgence of a strong upward trend in the UK 10-year gilt yields, which climbed to multi-week highs and approached the key 4.0% barrier towards the end of the week, an area last visited in mid-December. Still around the UK money markets, investors continued to reprice the likelihood of interest-rate cuts by the Bank of England (BoE) later in the year. Currently, these expectations seem to gyrate around 120 basis points (bps) of rate cuts in 2024, a tad lower than the previous estimate. A glimpse at the upcoming events across the Channel suggests that investors' attention should be focused on the release of UK GDP figures, Industrial and Manufacturing Production for November, all due in the latter half of the next week. GBP/USD: Technical Outlook GBP/USD remains supported by the vicinity of the 1.2600 region. In case sellers regain control, there is an immediate contention at the so far 2024 low of 1.2610 recorded on January 2. If the Cable breaks below this level, it could prompt a test of the 200-day Simple Moving Average (SMA) at 1.2532 to emerge on the horizon ahead of the December 2023 low of 1.2500 (noted on December 13). Further south aligns the interim 55-day and 100-day SMAs at 1.2484 and 1.2446, respectively, prior to the weekly low of 1.2187 of November 10, the October low of 1.2037 (October 3), the crucial 1.2000 threshold, and finally, the 2023 bottom of 1.1802, clinched on November 10.  If the upward trend picks up pace, the pair might revisit the December peak of 1.2827 (observed on December 28). It could then approach the weekly high of 1.2995 from July 27, 2023, just slightly above the significant threshold of 1.3000. The daily Relative Strength Index (RSI) improves to 58, and the MACD points to a near-term rebound.

Gold staged a late rebound to close the week little changed. XAU/USD could stretch higher once $2,060 is confirmed as support. December inflation data from the US could trigger the next big action in the pair. After posting three consecutive weekly gains to end 2023, Gold started the new year on the back foot and lost nearly 1% before erasing its weekly losses late Friday. The short-term outlook for Gold hinges on US inflation data for December, which could influence the Federal Reserve (Fed) interest-rate outlook and trigger a big reaction in XAU/USD next week. Gold price edged lower to begin 2024 The market action remained subdued on Tuesday as trading conditions started slowly to normalize following the long weekend. As the US Dollar (USD) staged a technical rebound following the dismal performance seen in the last couple of weeks of 2023, XAU/USD closed the day in negative territory. On Wednesday, the US ISM Manufacturing PMI improved to 47.4 in December from 46.7 in November. Additionally, the number of job openings on the last business day of November stood at 8.79 million, down modestly from 8.85 million in October. Although these data failed to trigger a noticeable market reaction, the USD benefited from risk aversion and caused XAU/USD to continue to push lower. As Wall Street's main indexes lost about 1% on the day, Gold dropped to its lowest level in nearly two weeks at $2,030. Private sector employment in the US rose by 164,000 in December and annual pay was up 5.4%, the Automatic Data Processing (ADP) reported on Thursday. The benchmark 10-year US Treasury bond yield climbed above 4% after this data and didn't allow XAU/USD to stage a meaningful rebound. The probability of the Federal Reserve (Fed) lowering the policy rate by 25 basis points in March declined to 65% on Thursday from 85% earlier in the week following employment-related US data. The monthly data published by the US Bureau of Labor Statistics showed on Friday that Nonfarm Payrolls (NFP) rose by 216,000 in December, surpassing the market expectation for an increase of 170,000. On a concerning note, the previous two NFP readings were revised lower by a total of 71,000. The Unemployment Rate held steady at 3.7% in the same period, but the Labor Force Participation Rate fell to 62.5% from 62.8% in November. Although the initial reaction provided a boost to the USD, underlying details of the jobs report didn't allow the currency to preserve its strength. In turn, XAU/USD recovered back above $2,050 after falling below $2,030 with the immediate reaction. Finally, the ISM Services PMI declined to 50.6 in December from 52.7 in November, putting additional weight on the USD's shoulders.  Gold price could show significant reaction to US inflation data Next week's economic calendar will not offer any high-tier data releases in the first half of the week. Hence, market participants are likely to assess technical developments for trading opportunities. On Thursday, the US Bureau of Labor Statistics (BLS) will publish Consumer Price Index (CPI) data for December. The Core CPI, which excludes volatile food and energy prices, is forecast to rise 0.3% on a monthly basis to match November's increase. A monthly core CPI print of 0.5% or higher could fuel another leg higher in US yields and weigh on XAU/USD. On the other hand, a softer-than-forecast reading could revive expectations for a Fed policy pivot in March. On Friday, CPI data from China, the world's biggest demander of Gold, will be watched closely by investors as well. In November, monthly CPI declined by 0.5%. Another negative print could highlight the lack of momentum in consumer spending and hurt Gold. Gold technical outlook The Relative Strength Index (RSI) indicator on the daily chart advanced to 60 on Friday, pointing out to a bullish tilt in the near-term bias. $2,060 (static level) aligns as a pivot level for XAU/USD. In case the pair starts using that level as support, it could target $2,080 (end-point of the latest uptrend) and $2,100 next.  On the downside, the 20-day Simple Moving Average (SMA) and the ascending trend line coming from early October form a key support level at $2,040. If Gold falls below this level and fails to reclaim it, $2,020-$2,015 (Fibonacci 23.6% retracement level of the latest uptrend, 50-day SMA) and $2,000 (psychological level, static level) could be set as next bearish targets.

EUR/USD edged lower early Friday after posting small gains on Thursday. An upbeat December jobs report from the US could weigh on the pair ahead of the weekend. 1.0920 aligns as key near-term technical support for the pair. EUR/USD gained traction during the European trading hours on Thursday but struggled to extend its rebound in the second half of the day as rising US Treasury bond yields supported the US Dollar (USD). The pair stays on the back foot and trades in negative territory below 1.0950 as the market focus shifts to December jobs report from the US.

Good Morning! The Dollar Index is holding below 102.72 and could dip to 102 or slightly lower before resuming a rise towards 103. Euro has bounced well from 1.09 and could rise towards 1.10 before pausing. EURJPY and USDJPY are bullish to 160 and 146 respectively. USDCNY rose above 7.17 but has dipped back from there. Unless it sustains rise past 7.17, it looks bearish for a fall back to 7.14/12. Aussie is near its support of 0.67 from where a bounce towards 0.675-0.68 is expected. Pound continues to trade within 1.26-1.28 region. USDRUB has declined from resistance at 92.60 and could now fall back towards 90-89. The range of 83.35-83.20/15 could hold in USDINR for now. EURINR has held the support at 90.80 and risen back. It could see a further rise towards 91.5 before possibly pausing. Important data releases to watch today are US NFP data and the US Avg Hourly Earnings. The US Treasury yields have risen back sharply. A break above their immediate resistances can see an extended corrective rise going forward. The US NFP and the Unemployment data release today is important to watch. The German yields are moving up towards their resistances in line with our expectation. The yields can resume their downtrend after testing the resistance. The 10Yr GoI is coming close to its resistance from where we expect it to see a fresh leg of fall. The 5Yr GoI on the other hand continues to remain mixed and stable within the narrow range. Dow Jones keeps alive the chances of seeing a fall on the downside first before a fresh leg of rally happens again. DAX is in a wait and watch situation. Nifty has bounced back but needs a strong rise above 21700 to avoid the danger of falling below 21500 and to clear the path towards its resistance. Nikkei is expected to trade sideways within 32500-34000 with a bullish view. Shanghai appears range bound. Crude prices look mixed and are likely to be ranged for a while. Gold sustains higher above its key support and is expected to move further in the near term. Silver has bounced back but the support turned resistance might cap the upside. Copper remains subdued and is vulnerable while below the resistance at 3.88-3.90. Natural Gas has dipped slightly but overall outlook is bullish for the near term. Today key focus is on the US NFP data which could bring in some volatility for commodity market. Visit KSHITIJ official site to download the full analysis

AUD/USD lost further ground on Thursday despite directionless dollar. Auspicious Caixin figures failed to lend support to the Aussie dollar. The loss of the 0.6700 region should open the door to extra losses. The selling pressure remained unabated around the Aussie dollar for yet another session on Thursday, this time prompting AUD/USD to put the 0.6700 support to the test. In fact, the pair failed to regain balance in spite of auspicious prints from the Chinese services sector, as per the Caixin PMI for the month of December, while the vacillating price action surrounding the greenback did nothing to lend some much-needed oxygen to the high-beta currency. Also contributing to the bearishness around the pair emerged another negative session in the commodity complex in spite of the recovery to multi-month tops of iron ore prices, which approached the $145.00 region per tonne. At present, the Australian dollar is expected to be influenced by several key factors in the upcoming weeks. These factors include the actions of the Fed and the potential for interest rate cuts, potentially as early as Q2, with March being a possibility. Additionally, the performance and recovery of the Chinese economy in the post-pandemic era will also play a significant role. All of these factors will unfold against the backdrop of the RBA maintaining its current stance. In the very near term, AUD/USD is predicted to closely follow the release of the US labour market report for the month of December, due on Friday. On this, Nonfarm Payrolls are expected to increase by 150K jobs, and the Unemployment Rate is seen to be higher at 3.8% in the last month of 2023.   AUD/USD short-term technical outlook Further AUD/USD decline should leave the 0.6700 support behind, putting a potential visit to the important 200-day SMA at 0.6582 back on the table. Prior to the December 2023 low of 0.6525 (December 7), the loss of this area should face a temporary support at the 55-day SMA at 0.6561. If bulls recover control, the focus is anticipated to transfer to the December 2023 high of 0.6871 (December 28) ahead of the 0.6900 zone, which coincides with the June and July tops. Once the pair clears this range, the psychological 0.7000 level will be the next to watch. A look at the 4-hour chart reveals the significant conflict region to be around 0.6700. Once breached, spot might return to the 0.6663 level before moving on to another strong support at the 200-SMA at 0.6657. The MACD is still in the red zone, while the RSI is flirting with the oversold territory. The resurgence of the bullish trend could encounter an initial resistance around the 55-SMA at 0.6790, which is seen as the last line of defense before previous high around 0.6870. View Live Chart for the AUD/USD