XAU/USD Current price: 2,014.40 Stock markets extend the rally after solid earnings reports and upbeat US data. The Bank of Canada kept its monetary policy unchanged, as widely anticipated. XAU/USD turned bearish in the near term, aims to test the $2.000 mark. The US Dollar surged in the American session, driving XAU/USD down to $2,011.72, a fresh weekly low. Upbeat United States (US) data boosted the local currency. S&P Global published the preliminary estimate of the January Producer Manager Indexes (PMIs), which showed manufacturing output improved to 50.3, much better than the 47.9 previous and the highest reading in over a year. The Services PMI came in at 52.9, beating the expected 51 and above the previous 51.4. According to the official report, business activity grew at the "sharpest rate in seven months." Meanwhile, the Bank of Canada (BoC) announced it left its key rate unchanged at 5% following the January policy. The statement was slightly more hawkish than anticipated, weighing down the odds for an April rate cut to around 40%. Still, stock markets maintain the positive tone, with Wall Street resuming its record rally on the back of better-than-anticipated earnings reports signaling economic health. XAU/USD short-term technical outlook From a technical point of view, XAU/USD is poised to extend its slump. The daily chart shows it met sellers around a bearish 20 Simple Moving Average (SMA), providing dynamic resistance at around the daily high of $2,036.80. At the same time, technical indicators resumed their declines within negative levels, gaining downward strength. Finally, the 100 and 200 SMAs remain below the current level, losing directional strength. The 4-hour chart shows a long bearish candle following a test of converging 100 and 200 SMAs, also around the intraday high, and XAU/USD accelerating the slide below a mildly bearish 20 SMA. Furthermore, technical indicators accelerated north, heading south almost vertically within negative levels, in line with another leg south. Support levels: 2,011.70 2,001.60 1,988.60   Resistance levels: 2,021.80 2,033.10 2,040.30  

EUR/USD Current price: 1.0895 Stock markets lead the way as earnings reports beat expectations, fueling risk appetite. Investors remain cautious ahead of first-tier events scheduled for Thursday. EUR/USD trades with a better tone, but buyers are unlikely to maintain the pressure. The EUR/USD pair flirts with the 1.0900 threshold ahead of Wall Street's opening as a better market mood plays against the US Dollar. Still, the pair trades within familiar levels as significant events loom and speculative interest saves its fire for after clearer clues. The Euro advances despite tepid local data. "Business activity in the euro area fell at the slowest rate for six months in January," according to the preliminary Producer Manager Index (PMI) survey conducted by the Hamburg Commercial Bank (HCOB), with the official report clarifying "downturns persists in both manufacturing and service sectors amid further falls in new business." In Germany, the Manufacturing PMI printed at 45.4, while the services index posted at 47.6. For the Eurozone, the Services PMI came in at 48.4, worse than the previous 48.8, while the manufacturing index improved to 46.6 from 44.4 in December. Later in the day, S&P Global will publish the January United States (US) preliminary PMIs, with manufacturing output expected to remain in expansionary territory.   The cautious stance will likely be dropped on Thursday, when the European Central Bank (ECB) will announce its decision on monetary policy, while the US will unveil the preliminary estimate of the Q4 Gross Domestic Product (GDP). EUR/USD short-term technical outlook The EUR/USD pair has trimmed its weekly losses but remains below the peak set on Tuesday at 1.0916. The daily chart shows it bounced once again from around a flat 200 Simple Moving Average (SMA), providing dynamic support around 1.0845. At the same time, the 20 SMA maintains its firmly bearish slope above the current level, developing at around 1.0945. Finally, technical indicators remain within negative levels without clear directional strength. The near-term picture is neutral. Technical indicators in the 4-hour chart have turned flat at around their midlines, suggesting easing buying interest. At the same time, EUR/USD recovered above a flat 20 SMA but trades below the 100 and 200 SMAs, both converging at around 1.0930. Overall, the risk of a steeper recovery seems limited, while a break below 1.0845 should trigger stops and anticipate another leg south. Support levels: 1.0845 1.0800 1.0760 Resistance levels: 1.0890 1.0945 1.0980  

EUR/USD Current price: 1.0895 Stock markets lead the way as earnings reports beat expectations, fueling risk appetite. Investors remain cautious ahead of first-tier events scheduled for Thursday. EUR/USD trades with a better tone, but buyers are unlikely to maintain the pressure. The EUR/USD pair flirts with the 1.0900 threshold ahead of Wall Street's opening as a better market mood plays against the US Dollar. Still, the pair trades within familiar levels as significant events loom and speculative interest saves its fire for after clearer clues. The Euro advances despite tepid local data. "Business activity in the euro area fell at the slowest rate for six months in January," according to the preliminary Producer Manager Index (PMI) survey conducted by the Hamburg Commercial Bank (HCOB), with the official report clarifying "downturns persists in both manufacturing and service sectors amid further falls in new business." In Germany, the Manufacturing PMI printed at 45.4, while the services index posted at 47.6. For the Eurozone, the Services PMI came in at 48.4, worse than the previous 48.8, while the manufacturing index improved to 46.6 from 44.4 in December. Later in the day, S&P Global will publish the January United States (US) preliminary PMIs, with manufacturing output expected to remain in expansionary territory.   The cautious stance will likely be dropped on Thursday, when the European Central Bank (ECB) will announce its decision on monetary policy, while the US will unveil the preliminary estimate of the Q4 Gross Domestic Product (GDP). EUR/USD short-term technical outlook The EUR/USD pair has trimmed its weekly losses but remains below the peak set on Tuesday at 1.0916. The daily chart shows it bounced once again from around a flat 200 Simple Moving Average (SMA), providing dynamic support around 1.0845. At the same time, the 20 SMA maintains its firmly bearish slope above the current level, developing at around 1.0945. Finally, technical indicators remain within negative levels without clear directional strength. The near-term picture is neutral. Technical indicators in the 4-hour chart have turned flat at around their midlines, suggesting easing buying interest. At the same time, EUR/USD recovered above a flat 20 SMA but trades below the 100 and 200 SMAs, both converging at around 1.0930. Overall, the risk of a steeper recovery seems limited, while a break below 1.0845 should trigger stops and anticipate another leg south. Support levels: 1.0845 1.0800 1.0760 Resistance levels: 1.0890 1.0945 1.0980  

Gold price meets with a fresh supply amid reduced bets for a March rate cut by the Fed. Geopolitical risks, retreating US bond yields and a softer USD lend support to the metal. Traders now await this week's important macro releases before placing directional bets. Gold price (XAU/USD) comes under some renewed selling pressure on Wednesday, albeit lacks follow-through and remains confined in a multi-day-old trading range through the early European session. Traders have now pushed back bets for an early interest rate cut by the Federal Reserve (Fed) in the wake of the strong US macro data, which suggested that the economy is in good shape. In fact, the current market pricing indicates a greater chance of the first interest rate cut in May, which was initially expected in March. Adding to this, the recent hawkish remarks by a slew of Fed officials forced investors to further scale back their expectations for a more aggressive policy easing in 2024. This, in turn, is seen as a key factor driving flows away from the non-yielding yellow metal. The downside for the Gold price, however, remains cushioned amid the worsening geopolitical conditions in the Middle East, which tends to benefit the traditional safe-haven metal. The US carried out strikes in Iraq on Tuesday, targeting three facilities used by Iranian-affiliated militant groups in retaliation to missiles and drone attacks on American troops over the past several days. Apart from this, the emergence of some US Dollar (USD) selling, led by retreating US Treasury bond yields, helps limit losses for the commodity. Traders might also prefer to wait on the sidelines ahead of important macro releases – starting with the flash global PMIs on Wednesday, followed by the Advance Q4 GDP print and the Core PCE Price Index from the US on Thursday and Friday, respectively. Apart from this, investors this week will take cues from the highly-anticipated European Central Bank (ECB) policy decision on Thursday, which might infuse volatility in the markets and produce short-term trading opportunities around the Gold price. Nevertheless, the aforementioned mixed fundamental backdrop warrants some caution before positioning for a firm near-term direction and ahead of the Fed's first policy meeting for 2024 on January 30-31. Technical Outlook From a technical perspective, the range-bound price action witnessed over the past few trading days points to indecision among traders over the near-term trajectory for the Gold price. That said, the recent repeated failures near the $2,040-$2,042 static resistance, along with the fact that oscillators on the daily chart have just started gaining negative traction, favour bearish traders. However, it will still be prudent to wait for some follow-through selling below the weekly low, around the $2,017-$2.016 area, before positioning for deeper losses. The next relevant support is pegged near the $2,000 psychological mark, or over a one-month low touched last week. A convincing break below the latter will set the stage for the resumption of a well-established downtrend witnessed over the past four weeks or so. The Gold price might then accelerate the fall towards the 100-day Simple Moving Average (SMA), currently around the $1,974-$1,973 zone, before dropping to the very important 200-day SMA near the $1,964-$1,963 region. On the flip side, the $2,040-$2,042 supply zone might continue to cap the immediate upside. A sustained strength beyond might trigger a short-covering rally and lift the Gold price to the next relevant hurdle near the $2,060-$2,062 region. The momentum could extend further, which should allow the XAU/USD to surpass the $2,078-$2,080 barrier and aim to reclaim the $2,100 mark for the first time since early December. Gold 4-hour chart

USD - Some headwinds for the dollar After strong gains from the summer, the dollar weakened again significantly from October. This continued a volatile sideways movement that began at the start of 2023. On the one hand, the markets reflected the high level of uncertainty regarding interest rate developments in both economic areas. On the other hand, however, the interest rate paths ultimately turned out to be similar. There is no clear preference for one of the two currencies this year either. Interest rate cuts are to be expected in both the eurozone and the USA. However, the timing and extent are uncertain, which speaks for volatility on the markets. We assume that the fundamental picture will shift slightly in favor of the eurozone, where the economy should improve somewhat. In the USA, on the other hand, we expect a slight weakening. All in all, this means some headwind for the dollar and therefore a slight weakening. JPY – BoJ remains cautious At its meeting in December, the Bank of Japan indicated that the sustainable and stable achievement of the inflation target is not yet foreseeable with sufficient certainty. For the time being, monetary easing will therefore be continued by controlling the yield curve. In our view, these statements have led to a slight weakening of the yen against the euro since the beginning of the year. The yen will therefore remain heavily dependent on the development of inflation and the Bank of Japan's reaction to it. In the event of an escalation of crises, the yen could quickly strengthen against the euro again at any time. CHF - Franc benefits from lower interest rate expectations Until recently, the franc had strengthened against the euro to a level of 0.94, probably triggered by a significant fall in yields on shorter-term German government bonds. The lower interest rate expectations on the market are obviously weighing on the euro against the franc. Inflation in the two currency areas should be close to each other in the coming months. From this perspective, there should therefore be little reason for the franc to strengthen further against the euro. In the coming weeks, it will therefore be important to keep a close eye on the bond market in particular for shorter maturities. In this context, the ECB will therefore play a decisive role with its further monetary policy decisions in the coming months. In the event of an escalation of geopolitical crises, the Swiss franc could continue to strengthen strongly against the euro at any time. Download the Full Report!

After an initially positive start European markets finished the day lower after as the sugar rush from reports of a large-scale Chinese stimulus plan, gave way to scepticism that it would be enough to deliver the help needed when what is needed is proper economic reforms as opposed to more liquidity. US markets underwent another record-breaking session with the Nasdaq 100 and S&P500 securing new record highs, while the Dow finished the day lower, as Netflix beat expectations after the closing bell on its Q4 numbers. Last night's positive finish in the US looks set to see markets in Europe open higher again today, though we could well struggle to hang onto the gains if recent experience is any guide.    If the ECB ever had a reason to think about cutting rates, then today's manufacturing and services PMIs would offer a compelling reason but for the fact that headline inflation is at 2.9% and core inflation is at 3.4%, and policymakers have insisted that tackling prices is their priority. Let's see how if that consensus holds out tomorrow when the ECB meets for the first time this year. Over the last 15 months both the French and German manufacturing sectors have been very much in recessionary territory when it comes to economic activity. Last month France manufacturing hit its lowest levels since the Covid lockdowns at 42.1, while in Germany we saw a modest improvement to 43.3 from 42.6, having been as low as 38.8 in July last year. We are expected to see modest improvements in today's January flash numbers but nothing to suggest a significant uptick with expectations of an improvement to 42.5 and 43.7 respectively. Service sector activity hasn't been much better with France edging up to 45.7 in December having been as low as 44.4 in September. German services activity does appear to be showing a little more resilience but was still subdued at 49.3 in December and is expected to come in unchanged. The UK economy on the other hand despite its many challenges has shown slightly more resilience but has struggled as far as manufacturing is concerned, sliding to 43 in August last year, although we have seen a slight improvement since then, although we did slow to 46.2 in December. The whole of Europe and the UK has been in a manufacturing session for over a year now, while the services sector has also struggled. On services the UK has shown slightly more resilience rising sharply at the end of last year to 53.4 from 50.6. While welcome, this somewhat jars against what we saw in December retail sales which plunged -3.2%. Today's January services flash PMI is expected to show a slowdown to 53. We also have the Bank of Canada rate decision which is expected to see the central bank keep rates unchanged at 5%, with the likelihood we could see a hawkish bias, after headline inflation in December ticked up to 3.4% and hourly wages for permanent employees jumped from 5% to 5.7%.. EUR/USD – At risk of sliding towards the December lows at 1.0720, having slipped below the 200-day SMA at 1.0830. Currently capped at the 50-day SMA with main resistance up at 1.1000.  GBP/USD – Pushed up towards 1.2750 yesterday before slipping back with support at the 50-day SMA as well as the 1.2590 area needed to hold or risk a move lower towards the 200-day SMA at 1.2540. We need to get above 1.2800 to maintain upside momentum. EUR/GBP – Still finding support at the 0.8540/50 level which has held over the last 2-months. A fall through here could see further falls towards the 0.8520 area. We still have resistance at the 0.8620/25 area and the highs last week. USD/JPY – Edged beyond the 148.50 area towards 148.80 as it looks to close in on the 150.00 area. Pullbacks likely to find support at the 146.25 level cloud, as well as the 50-day SMA. FTSE100 is expected to open 24 points higher at 7,509. DAX is expected to open 108 points higher at 16,735. CAC40 is expected to open 34 points higher at 7,422.