Markets On Wednesday, U.S. stocks experienced a significant surge as investors assessed robust corporate profits and witnessed major technology companies extending their upward trajectory. These movements occurred amidst ongoing discussions regarding the timing of potential interest rate cuts. Even as U.S. yields backed up a touch, notably, the S&P 500 approached the 5,000 mark for the first time, hinting at mega-cap tech's de-coupling from bond yields but supported by an upbeat macro story, where the economy continues to operate at an above-trend pace with no material signs of falling below trend in the near-term. Indeed, higher rates don't appear to burden consumers or corporations significantly, enabling the Fed to wait longer to ensure inflation control without disrupting the stock market's momentum amid robust U.S. growth dynamics. While revelling in the glow of robust macro growth, market participants took stock of corporate performance during this earnings season, with approximately two-thirds of S&P 500 company reports now available. Overall, results have surpassed Wall Street expectations on average, overshadowing weakness in other less weighty areas at the index level. It's becoming increasingly evident that equities are unfazed and indifferent to the Federal Reserve's less dovish stance, which suggests that unless there is a substantial deterioration in the labour market, the central bank's baseline expectation for 2024 includes three rate cuts. As the year began, following a risk rally in November and December primarily driven by increasing bets on rate cuts and declining bond yields, there was significant speculation about whether stocks could maintain their strength if market expectations for Fed easing diminished. Market pricing still suggests more easing compared to the last dot plot released by the Federal Reserve. However, when you delve into what drives that pricing – the array of potential macro-policy scenarios and the probabilities traders attach to them – it's reasonable to argue that the rates market's "base case" now aligns closer with the Fed's projections. Indeed, the "extra" cut premium above and beyond 75 basis points reflects two main hedge factors: i) Traders' assessment of the Federal Reserve's willingness to act decisively in response to devolving economic conditions. ii) The perceived probabilities traders assign to various tail risks, including geopolitical events, economic shocks, and other unforeseen developments that could impact the economic outlook and necessitate policy adjustments by the Fed. The current market pricing, as of Wednesday, incorporates an expectation of a 75 basis point reduction in interest rates, along with a fair-minded premium intended to address lingering concerns about the possibility of a hard economic landing. Interestingly, equities seem to have become indifferent to the movements in rates and bonds, particularly after the Federal Reserve removed its tightening bias. The behaviour of rates and bond markets is cartoonish and probably worth ignoring as bond bears are, for all intent and purposes, in hibernation. While it's tempting to subscribe to market pricing as a more accurate gauge of future policy trajectories compared to official statements from the Fed, it's important to note that rate markets have been forever in overshoot and undershoot mode throughout this economic cycle. Hence, seldom have rates speculators have been the absolute guiding light In summary, every corner of Wall Street has revised its U.S. growth forecast upward for 2024. This optimistic backdrop has also supported earnings growth, which has been crucial for equities, particularly amid pressure from higher interest rates. As we progress through the fourth-quarter reporting period, S&P 500 operating earnings growth is much better than expected and has effectively diminished the influence of bearish sentiment in the market. Oil Markets Oil futures rallied Wednesday after the Energy Information Administration (EIA) released its weekly inventory statistics. This surge was driven by a larger-than-anticipated decline in U.S. fuel stocks and escalating geopolitical tensions in the Middle East. Gasoline inventory in the United States experienced a drawdown of 3.146 million barrels (bbl) to 250.988 million bbl during the week ended February 2, according to the Energy Information Administration (EIA). This drawdown, the first since mid-December, was attributed to higher demand and reduced production. Gasoline stocks transitioned from 3.053 million bbl above the five-year average to 1.701 million bbl below the historical baseline. The drawdown contrasted with a 3.652 million bbl build reported late Tuesday by the American Petroleum Institute. Hence, the bullish inflection point.

AUD/USD rose further and flirted with the 100-day SMA near 0.6630. The selling pressure in the greenback favoured extra gains. Investors continued to assess the latest hawkish hold by the RBA. The Aussie dollar found another excuse to extend the weekly bounce in the continuation of the downward bias in the greenback on Wednesday. In fact, the US dollar gave away further gains after hitting a new yearly high north of the 104.00 barrier when tracked by the USD Index (DXY) earlier in the week, all amidst further investors' repricing of a potential interest rate cut by the Federal Reserve (Fed) either in May or June. Back to the domestic panorama, AUD remained underpinned pari passu with traders' assessment of the latest interest rate decision by the Reserve Bank of Australia (RBA), which maintained interest rates unchanged at 4.35% amidst a hawkish message, leaving the door open to a potential interest rate hike in the future. Continuing with the RBA, the Statement on Monetary Policy (SoMP) revealed a slight reduction in the bank's inflation forecasts, expecting both metrics to stay below 3% by the fourth quarter of 2025. Furthermore, the RBA revised down its GDP growth projections for the foreseeable future, primarily reflecting a less optimistic outlook for consumer spending and housing investments in the near term. Furthermore, Governor Bullock departed from the expected move towards a dovish stance and underscored the incomplete nature of addressing inflation, emphasizing that the current inflation rate is considered unacceptably high. Also undermining the pair's upside potential were the persistent downtrend in iron ore and the rapid resumption of the selling bias in copper prices. AUD/USD daily chart AUD/USD short-term technical outlook Further losses in AUD/USD should clear its 2024 level of 0.6468 (February 5), to then embark on a potential test of the 2023 bottom of 0.6270. (October 26). The breach of the latter may prompt a move to the round level of 0.6200 to come on the horizon prior to the 2022 low of 0.6169 (October 13). On the upside, there is an immediate hurdle at the crucial 200-day SMA at 0.6572, which is ahead of the interim 55-day SMA at 0.6644. The breakout of this zone may lead the pair to target the December 2023 high of 0.6871 (December 28), followed by the July 2023 top of 0.6894 (July 14) and the June 2023 peak of 0.6899 (June 16), all just before of the important 0.7000 level. The 4-hour chart indicates some early consolidation, paving the way for a dip to 0.6452 once 0.6468 is cleared. On the bullish side, 0.6610 is an immediate hurdle ahead of the 200-SMA at 0.6658. The surpassing of this zone indicates a possible progress to 0.6728. The MACD rebounds somewhat but remains well in the negative zone, and the RSI approaches the 50 threshold. View Live Chart for the AUD/USD

The gap. The test. The pattern. What does this combination say about the behavior of market participants? Over the last few weeks, I have been sharing with you my point of view on the current technical situation in the XOI, natural gas, copper, and individual companies every trading day. Thanks to them, many of you have made the decision to act in accordance with the forecasts and have already made money. Congratulations to you! But probably at the same time, many of you may have been wondering: hey, what about crude oil? Why don't we know what your point of view on this most important (or one of the most important) commodity for us is? Today, I decided to pull back the curtain and share with you my premium part on crude oil from yesterday. Why? Because yesterday we closed our short positions and took quite nice profits off the table. If you want to know what technical factors influenced this decision, I encourage you to read the article below. And… if next time you don't want to miss such an opportunity and join the group of investors who also make money on this commodity, I encourage you to subscribe to Oil Trading Alerts. Yup, the next profitable opportunities may be just around the corner. Technical picture of Crude Oil Briefly: in my opinion, closing our profitable short positions and taking profits off the table is justified from the risk/reward point of view. In yesterday's Oil Trading Alert, you could read the following: (…) the green gap from Jan.12 remained open, which, in combination with the nearest supports, suggests that the bulls may be a bit more active in this area – especially when we factor in the 61.8% Fibonacci retracement (based on the entire mid-Dec.-Jan. upward move) and smaller volume during the session. From today's point of view, we see that the situation developed in tune with the above assumption and yesterday's session left a doji candle on the chart, which signals that market participants are indecisive. In other words, the bears are not as strong as they were earlier. But let's start from the beginning… Looking at the daily chart, we see that yesterday's session started with a green gap ($72.28-$72.75), which encouraged the bears to attack and deprive the bulls of a new ally. Thanks to their action, the price of black gold dived below all important very short-term supports (the lower border of the black channel, the lower line of the blue triangle, the lower border of the green gap from Jan.12, and the 61.8% Fibonacci retracement), but the sellers were unable to keep the commodity at such low levels. Their opponents came back to the trading floor and pushed light crude higher, invalidating all breakdowns under the mentioned levels. This positive development encouraged them to go north even further, but the proximity to the previously broken 50-day moving average was enough to trigger a pullback. Finally, crude oil closed the day only 3 cents above the opening price, creating on the chart a dragonfly doji candlestick formation, which can signal a potential reversal. Such a scenario is currently also supported by yesterday's price action: pro-bullish green gap, the mentioned invalidation of the breakdowns under support, and visibly lower volume. At this point, it is worth keeping in mind that the smaller volume (from session to session) signals the bears' decreasing involvement in the generated declines, which raises some concerns about their willingness to fight for lower levels. Taking profits off the table Connecting the dots, it seems that closing our profitable short positions (as a reminder, they were open a week ago when crude oil was trading above $77) and taking profits off the table is justified from the risk/reward point of view at the moment. Nevertheless, please keep in mind that even if the buyers push the commodity higher, the way north may not be as easy as it may seem. Why? Because light crude is still trading not only below the previously broken upper border of the blue triangle and the upper line of the orange consolidation (marked with an orange dashed line on the above chart), but also under the 50-day moving average. Additionally, the sell signals generated by the indicators remain in the cards (as well as the strong pro-declining candlestick formation [a big bearish engulfing candlestick pattern, which materialized on significant volume] I wrote about yesterday), therefore, in my opinion, opening long positions is not justified from the risk/reward perspective. Nevertheless, if the bulls show weakness in the coming days and reliable technical signals appear, I'll consider re-opening short positions. Stay tuned. Summing up, oil bulls managed to invalidate earlier breakdowns under important supports, which, in combination with the green gap from the beginning of the day and a doji candlestick...

XAU/USD Current price: 2,037.05 Without relevant macroeconomic data, the focus stays on Fed's speakers. The US Dollar stays under moderate selling pressure, XAU/USD reaches a fresh weekly high. XAU/USD gained momentum with Wall Street's opening, needs to break through the intraday high. Spot Gold spent the first half of the day trading lifeless in the $2,030 price zone, picking up some steam after Wall Street's opening. XAU/USD jumped to $2,044.64 as the positive tone of Wall Street undermined demand for the US Dollar. The Greenback stayed on the back foot for most of the day, although it posted limited losses against most major rivals amid the absence of first-tier events. Market players are repositioning after major central banks' monetary policy announcements, most of which included pouring cold water on rate cut hopes. Federal Reserve (Fed) speakers are flooding the wires this week, and despite a generalized optimism regarding inflation moving in the right direction, policymakers also warned about the dangers of moving too early or too fast. Meanwhile, US Treasury yields shed early gains, also weighing on the USD. The 10-year Treasury note offered as much as  4.13% ahead of the opening, now down to 4.09%, unchanged on the day. XAU/USD short-term technical outlook XAU/USD trades around $2,040, posting gains for a second consecutive day. Technical readings offer a neutral stance. In the daily chart, technical indicators hover around their midlines without directional strength. At the same time, the pair barely holds above a directionless 20 Simple Moving Average (SMA), although the longer ones maintain their upward slopes well below the current level. In the near term, and according to the 4-hour chart, the risk skews to the upside. XAU/USD surged above its 20 and 100 Simple Moving Averages (SMAs), with the shorter one maintaining its bearish slope. At the same time, technical indicators crossed their midlines into positive territory, with moderated upward strength. Gold would need to run past the aforementioned intraday high to maintain the positive bias in the upcoming sessions. Support levels: 2,022.75 2,009.10 1,988.90 Resistance levels: 2,044.60  2,053.10 2.065.60

EUR/USD Current Price: 1.0769 Mixed words from Federal Reserve officials reinforce the market's cautious stance. German Industrial Production fell sharply in December, weighing on the Euro. EUR/USD trades near its weekly high, but chances of a steeper advance seem limited. Financial markets extend the cautious trading on Wednesday amid mixed comments from Federal Reserve (Fed) officials and Chinese woes, although the US Dollar remains under modest selling pressure. EUR/USD changes hands in the 1.0760/70 region, advancing for a second consecutive day, yet modestly. On the one hand, Fed of Cleveland President Loretta Mester said that the central bank could lower interest rates at some point later this year but warned that it could be a "mistake" to cut too soon. On the other hand, Fed's Philadelphia President, Patrick Harker, stated that a soft-landing is in sight for the United States (US) economy, although he also added that inflation is falling and that he sees real progress on getting it back to target. Finally, he noted the labor market is in a better balance. Meanwhile, plummeting Chinese stocks have led to Beijing's intervention these last few days, with major stocks losing over the 10% daily limit. Authorities aimed to increase liquidity and safeguard market stability through expanded purchases of exchange-traded funds linked to the country's onshore stocks. Fears of contagion weigh on the market's mood. Asian shares traded mixed, while European indexes struggle to post gains, conditioning Wall Street ahead of the opening. Data-wise, Germany reported that Industrial Production in December slid by 1.6% in the month and 3% from a year earlier. Across the pond, the US published MBA Mortgage Applications for the week ending February 2, which increased by 3.7%, improving from a previous 7.2% contraction. The country will shortly unveil the December Goods and Services Trade Balance, while several Fed speakers will be on the wires throughout the American afternoon. Finally, government bond yields ticked higher, maintaining the positive tone but lacking momentum at the time of writing. The 10-year Treasury note currently offers 4.13%, up 4 basis points (bps). EUR/USD short-term technical outlook The EUR/USD pair shows no actual bullish momentum despite posting gains for a second consecutive day, as it still trades below its weekly high of 1.0783. Technical readings in the daily chart suggest the bullish potential is limited. The pair develops below all its moving averages, with the 100 Simple Moving Average (SMA) at around 1.0785, reinforcing the resistance area. The 20 SMA, in the meantime, extends its bearish slope above the longer one, another sign of bears' dominance. Finally, technical indicators turned modestly higher, but remain within negative levels, reflecting limited buying interest. The 4-hour chart suggests buying interest has given up. EUR/USD cannot overcome a firmly bearish 20 SMA, struggling around it, while the longer moving averages keep heading south far above the shorter one. At the same time, technical indicators have pared their advances within negative levels and turned neutral below their midlines. Support levels: 1.0720 1.0695 1.0650 Resistance levels: 1.0785 1.0840 1.0880

EUR/USD recovered above 1.0750 following a two-day decline. The pair could encounter stiff resistance near 1.0800. Investors will continue to pay attention to central bank commentary and risk perception. EUR/USD registered small gains on Tuesday and continued to push higher toward 1.0800 early Wednesday. The pair needs to flip that level into support to attract technical buyers. The renewed US Dollar (USD) weakness helped EUR/USD gain traction on Tuesday. In the absence of high-tier macroeconomic data releases, the USD struggled to find demand as the benchmark 10-year US Treasury bond yield corrected lower following the impressive upsurge that was fuelled by the upbeat January jobs report late last week.