EUR/USD faces a sharp sell-off as Middle East crisis deepen. ECB policymakers pushed back market expectations of early rate cuts due to high inflation. The major will be guided by the US Retail Sales data, which will be published on Wednesday. Persistent Middle East tensions have improved the appeal for safe-haven assets while risk-perceived currencies have been hit hard in the Asian session on Tuesday. The EUR/USD pair has declined to near weekly low around 1.0900 amid dull risk-appetite as Iran-backed-Houthi rebels threatened to retaliate for airstrikes launched by the United States and the United Kingdom in Yemen. The Euro fails to gain strength despite European Central Bank (ECB) policymaker Joachim Nagel pushed back against market expectations of early rate cuts. Nagel said it is too early to discuss rate cuts as inflation is too high. ECB policymaker Robert Holzmann opposed rate cuts for the entire year, citing upside risks to energy prices due to deepening conflicts over commercial shipments from the Red Sea. Meanwhile, faltered economic development in the German economy in 2023, weighed down by inflation and global headwinds are expected to keep the Euro under stress. The German economy shrank by 0.3% in 2023 as higher interest rates by the ECB were resulted in unfavourable financial conditions. The US Dollar Index (DXY) rallies to near 103.00 amid upbeat demand for safe-haven assets. Going forward, investors await the United States monthly Retail Sales data for December, which will provide more cues about early rate cuts from the Federal Reserve (Fed). Investors have projected that consumer spending grew at a momentum of 0.4% against 0.3% increase in November. A decline in the Retail Sales data will allow Fed policymakers to support higher interest rates atleast for the first-half of this year. EUR/USD technical analysis EUR/USD is trading near the lower-end of the consolidation formed in a range of 1.0900-1.1000 on an hourly scale. The near-term appeal has turned bearish as the asset has slipped below the 200-period Exponential Moving Average (EMA), which oscillates around 1.0956. The 14-period Relative Strength Index (RSI) has slipped into the bearish range of 20.00-40.00, which indicates an activation of a downside momentum. Fresh downside will appear if the major currency pair drops below January 9 low of 1.0910. This could result in a downside move towards 22 November 2023 low at 1.0825 and 5 November 2023 high near 1.0756. In the alternate case, an upside move above January 11 high at 1.1003 will allow it to recapture five-month high around 1.1120. A breach of the latter would clear pipeline for 19 July 2023 low at 1.1174.

Its hardly surprising risk is a bit unstable this morning. Following a slew of airstrikes on Houthi sites and installations in Yemen, the group has made it clear to both Number 10 Downing Street and The White House that they will continue to assault ships in and around the Red Sea. The fact that the attacks have continued makes it more likely that US airstrikes on Yemen will continue. The Houthis fired an anti-ship ballistic missile at the US-owned Gibraltar Eagle in the most recent incident. After seven years of unwinnable war with the Saudi-led coalition (supplied by the US), it appears that the Houthis have a high threshold for casualties, both civilian and combatant and that their basic tenet appears to be an ongoing state of armed confrontation. The current regime in Tehran claims that the Houthis operate independently from the Quds and are operating autonomously from Iraq oversight. However, everyone knows this rebuke is bordering on the theatre of the absurd. It appears that any hope to resolve this issue means the US pushes Israel into an unlikely ceasefire or, in the worst case, the ultimatum request will get delivered to Tehran.

Gold price recovery falters once again near $2,060 ahead of Fed Waller's speech. Middle East geopolitical escalation, higher US Treasury bond yields bump up the US Dollar. Gold price confirmed a symmetrical triangle breakout on Monday, upside potential stays intact.   Gold price is challenging the $2,050 barrier early Tuesday, feeling the heat from resurgent US Dollar (USD) demand amid a further escalation in the Middle East geopolitical tensions. Gold price looks to geopolitics and Fed Waller's speech Gold price has turned red for the first time in four trading days, stalling its recovery momentum from three-week lows of $2,013. Gold price is undermined by renewed US Dollar demand across the board, as investors scurry for safety in the Greenback amid intensifying geopolitical tensions in the Middle East. Risk sentiment took a hit following reports that Iran's Islamic Revolutionary Guard Corps (IRGC) fired missiles at targets near the US Consulate in Erbil, Iraq. Iranians retaliated against the terrorist attacks this month that killed almost 100 people near the burial site of General Qassem Soleimani. Meanwhile, Gold price also bears the brunt of rising US Treasury bond yields, as they play catch up after the holiday weekend. The uptick in the US Treasury bond yields also acts as a tailwind to the US Dollar advance. The Greenback also takes advantage of the market's concerns surrounding China's economic outlook, with the Gross Domestic Product (GDP) and activity data coming up on Wednesday. Attention now turns toward the highly-anticipated speech by the US Federal Reserve (Fed) Governor Christopher Waller due later at 16:00 GMT. Waller is set to speak about the economic outlook and monetary policy at the Brookings Institution, in Washington DC. Audience questions are expected to follow. During his last appearance, Waller flagged a dovish policy pivot, smashing the US Dollar alongside the US Treasury bond yields. Waller noted that "if inflation consistently declines, there is no reason to insist that interest rates need to remain really high.  Therefore, his comments will hold the key to the market's pricing of the March Fed rate cut. Currently, markets are wagering roughly 70% odds that the Fed will lower rates in March.   Gold price technical analysis: Daily chart Despite the pullback from near multi-day highs, the short-term technical outlook for Gold price remains constructive, in the wake of a symmetrical triangle breakout confirmed on the daily chart on Monday. Gold price closed Monday above the falling trendline resistance at $2,052, charting a bullish technical breakout. The 14-day Relative Strength Index (RSI) indicator is turning south but holds above the midline, suggesting that any pullbacks in Gold price will be a good buying opportunity. Gold buyers could find fresh demand at the 21-day SMA resistance-turned-support of $2,047. A daily candlestick close below the latter is critical to reviving the bearish interests. The next downside target is seen at triangle support of $2,049. Further down, Friday's low of $2,027 could offer some temporary respite to Gold buyers. The last line of defense for Gold optimists is seen at the 50-day SMA at $2,020. On the upside, powerful resistance is seen at around $2,060, above which the static resistance at $2,080 will come into play. If the upbeat momentum regains traction, a retest of the $2,100 barrier cannot be ruled out.

At its December meeting, the Federal Reserve effectively declared victory over inflation. They didn't didn't use those words, but that was the signal given by the policy trajectory laid out by the FOMC. Is this victory dance premature? Financial analyst Jim Grant thinks so. In an interview on Bloomberg Markets: The Close with Romaine Bostick, Grant said it's way too early for the Fed to say "mission accomplished." According to the Fed's "dot plot" showing the expected trajectory of interest rates. The central bank has penciled in three rate cuts for 2024 with another four cuts in 2025. That would lower rates to between 2 and 2.5 percent. Federal Reserve Chairman Jerome Powell tried to temper this projection, emphasizing that inflation remains too high. Inflation has eased from its highs, and this has come without a significant increase in unemployment. That's very good news. But inflation is still too high. Ongoing progress in bringing it down is not assured and the path forward is uncertain. Powell was talking, but the markets weren't listening. As Bostick put it, they were all in on "mission accomplished." Grant disagreed with the notion that inflation is beat saying it is "endemic." In other words, regularly occurring. It recedes. It reappears. It never disappears. Grant pointed out that the federal government is running massive budget deficits even with unemployment at 3.7 percent. The Fed is all too eager, I think, to imply, if not declare, 'mission accomplished.  Bostick asked Grant why he thinks the Fed even felt the need to communicate rate cuts at this stage in the inflation fight. Grant said that if he could "read the mind of the composite Federal Reserve," he thinks he would "impute this great insight." I think that they would say to themselves, 'The cost, the unseen but still considerable cost of a decade's worth of zero percent interest rates is a great malinvestment, as they say in the economic quarterlies.' You know, the white elephants that spring up when money is free. Artificially low interest rates incentivize borrowing and debt. This blows up economic bubbles. When the central bank tries to normalize rates, these bubbles inevitably pop. This cycle is no exception. We're already seeing signs of distress in the economy with more corporate bankruptcies in 2023 than the pandemic year.  Grant said officials at the Fed are likely cognizant of this fact even if they would never say it out loud. Misallocation of capital, let us call them misguided because of the false interest rates on offer, introduced an element of frailty in the structure of things. And what the Fed might be thinking is that notwithstanding a 3.7 percent unemployment, notwithstanding great looks you get from the Atlanta GDP Now data, notwithstanding all that, we don't want to overdo it because of this underlying frailty induced by this decade-long experiment with zero percent borrowing cost. Grant called inflation an "arbitrarily imposed tax," and he said the new stance taken by the Fed, whether explicit or implicit, is basically "imposing a tax on the possibility of a sustained policy of much higher inflation than they had promised us." Grant went on to call the Fed's 2 percent target a "dubious proposition." Money is what you get for work, which means money is heartbeats. … They're not infinite, these heartbeats. And if you tax them through the depreciation of the currency – through a contemplated and intended depreciation of the currency – you are legislating, without a vote, a tax on the working lives of Americans. So, I think as a moral proposition, it's dubious. Milton Friedman said inflation is always and everywhere a monetary phenomenon. Grant said he would call it "always and everywhere a moral phenomenon."  When you boil it all down, the Federal Reserve is stuck between a rock and a hard place. The question becomes what is the bigger burden – higher borrowing costs or higher price inflation? Grant said he thinks Jerome Powell and other members of the Federal Reserve look in the mirror and see themselves as Captain Chesley Burnett "Sully" Sullenberger who landed a crippled U.S. Airways jet on the Hudson River.  The Fed has arrogated to itself the role of central planning agency. … It's going to try to balance economic growth with the stability and integrity of the currency. How do they do that? I don't think it's given to mortal man and woman to do these things. Grant said he has proved to the readers of Grant's Interest Rate Observer he can't successfully predict the future no matter how hard he tries. But the Fed has unintentionally done the same without acknowledging the same. However, it is proceeding as if it did have tomorrow's newspaper in its hands, which it doesn't

The dollar drifts up and down. Gold moves higher on Friday. Good Day… And a Marvelous Monday to you… In my past life, I would be taking today off, as it is a national holiday… But, given my status as non-working, I thought what the heck! Well, the NFL didn't make any friends, and received a lot of criticism, even from a senator, about putting a playoff game on a streaming channel… As well they should! The game in Buffalo had to be moved to today, as is the norm for Buffalo, they were getting a winter storm on Saturday… Went to dinner last night with my good friend, Gus, who's down here for the winter like me! Seals and Crofts greet me this morning with their great song: We May Never Pass This Way Again…  Well, last Tub Thumpin' Thursday saw the STUPID CPI print… And even with all the hedonic adjustments that the BLS adds to the inflation calculation, the report showed that it was too soon to sound the "All Clear" siren on inflation… This from the headlines: "Last month, overall prices rose 3.4% from a year earlier, up from 3.1% in November, according to the Labor Department's consumer price index. On a monthly basis, costs increased 0.3% after virtually flatlining the previous two months." And that proved to be something that the markets couldn't shake all day, and the dollar rose, and stocks sunk… IF, and that's a BIG IF, the Fed Heads really care to look at the STUPID CPI, that meant that they would not be ready to cut rates as soon as March, as the markets once thought. And Fed Head, Loretta Mester confirmed my thought last week when she said that "March was too soon to cut rates"… And Fed Head Neel Kashkari had this to say (Reuters) "Minneapolis Federal Reserve Bank President Neel Kashkari said he would err on the side of overtightening monetary policy rather than not doing enough to bring inflation down to the central bank's 2% target, the Wall Street Journal reported on Monday. "Undertightening will not get us back to 2% in a reasonable time," Kashkari said in an interview with the Journal. Kashkari said he needed more information to come to a firm decision on interest-rate steps moving forward. "I am not ready to say we are in a good place," he told Journal." It's at this point that I say, "I told you so"… I told you inflation was sticky, and that March was too soon…   Not so fast there Chuck… What about the very weak PPI (wholesale inflation) that printed on Friday? Well, the bond boys seemed to recharge their thoughts of rate cuts early this year because of that, you do have that as a result of the weak PPI… And on Friday, the dollar drifted… Gold gained $20.10, and Silver gained 43-cents…  So, it's only the bond boys that took the PPI print to heart…  Now knowing that inflation had ticked higher in December, you would have thought that the dollar would lose ground, and Gold would gain ground… Stocks would get sold, and bonds would get sold… And you, and I would have been wrong!   So what gives? The dollar on Thursday morning was down 2 index points to start the day, and then only ended down 1 index point at the end of the day, which meant that the dollar gained during the day… Gold, which was up $7 in the early trading, only gained $4 by the end of the day, thus losing $3 intraday… Stocks were down 271 points and then miraculously turned around to a flat trading day…   I would say that there had to be some great interference during the trading day Thursday, And then on Friday… Gold took off to the races, and brought Silver along.. .At one point in the day Gold traded as high as $2.061, but ended the day up $20.10 to close at $2,049.50… Silver saw an even greater gain with it trading at $23.52, which was 76-cents higher, but had to settle for a gain of 43.5-cents and a price of $23.19…  So, maybe it took the traders a day to realize that inflation isn't going away that easily, and the geopolitical problems are escalating, and that there needs to be some protection from inflation nd wars, after all… Maybe, just maybe, because you never know, what's on their minds these days…  Friend, Ed Steer, had this to say about that news: "This whole EV thingy is turning into a big bust, as I knew it would. I'll never own one of those things. It's -31C/-24F here right now — and they are totally useless when it's this cold." It was negative 5 degrees in St. Louis yesterday…   In the overnight markets last night… The dollar drifted a bit higher gaining 1 index...

XAU/USD Current price: 2,051.10 A holiday in the US maintains markets ranging, although the sentiment is sour. The US calendar has little to offer this week, investors keep an eye on inflation and Davos. XAU/USD is marginally bullish in the near term, needs to clear the $2,062.35 resistance area. Gold Price holds on to gains, trading near an intraday high of $2,058.55. XAU/USD hovers above $2,050 a troy ounce in a quiet American afternoon, as United States (US) markets are closed amid the Martin Luther Day Holiday. The week started with optimism, as reflected by the positive tone of Asian shares, but the positive sentiment faded during European trading hours, as tepid local data weighed EU indexes lower. Across the FX board, the US Dollar trades mixed, particularly stronger against commodity-linked currencies, usually more sensitive to risk-off. Beyond the holiday, the US macroeconomic calendar has little to offer this week. The country will release  December Retail Sales next Thursday and the preliminary estimate of the January Michigan Consumer Sentiment Index on Friday. The focus will remain on inflation, as Canada, the United Kingdom, Germany, and the Eurozone will post updates. Investors will also keep an eye on the World Economic Forum in Davos, which will feature speeches from major central bankers and authorities. XAU/USD short-term technical outlook From a technical perspective, XAU/USD seems poised to extend its recovery. The pair holds above a mildly bullish 20 Simple Moving Average (SMA) in the daily chart while it consolidates at the upper end of Friday's range. At the same time, the 100 SMA is crossing above a flat 200 SMA, both in the $1,960 region. Finally, technical indicators are directionless, with the Momentum indicator stuck to its 100 level and the Relative Strength Index (RSI) holding at around 57. In the near term, and according to the 4-hour chart, the risk skews to the upside, although additional confirmation is required. XAU/USD meets intraday buyers around a flat 100 SMA, while the 20 SMA crosses above a directionless 200 SMA  below it. Technical indicators, in the meantime, remain within positive levels, ticking marginally higher but lacking enough momentum to confirm another leg north. Friday's high at $2,062.33 is the level to watch, as a break above it should lead to additional gains towards the $2,100 mark. Support levels: 2,049.15 2,037.90 2,024.50 Resistance levels: 2,062.35 2,074.40 2,087.00

EUR/USD Current price: 1.0948 United States markets will remain closed amid the Martin Luther King Day holiday. European data disappointed, limiting the bullish potential of the Euro. EUR/USD is neutral-to-bearish in the near term, likely to continue ranging. The EUR/USD pair trades uneventfully around its daily opening on Monday, with a scarce macroeconomic calendar and a holiday in the United States (US) exacerbating range trading. Investors take clues out of stocks' behavior, with European indexes currently trading in the red. Equities started the day with a positive tone amid persistent bets the US Federal Reserve (Fed) will go on with rate cuts this year, potentially triggering the first one in March. However, stock markets lost momentum and European indexes post modest losses at the time. Meanwhile, the US celebrates Martin Luther King Day. That means there will be no activity on Wall Street or in Treasuries. Data-wise, Germany published the December Wholesale Price Index, which slid 0.6% MoM. The Eurozone Trade Balance posted a surplus of €14.8 billion in November, while Industrial Production in the same month declined 6.8% YoY, much worse than anticipated. EUR/USD short-term technical outlook The  EUR/USD pair hovers around the 1.0950 level without clear directional strength. The pair has been range trading for over a week now, and the daily chart shows that the risk skews to the downside. The 20 Simple Moving Average (SMA) turned flat, providing dynamic resistance around 1.0980. The SMA has attracted sellers pretty much since the month started. Meanwhile, the 100 and 200 SMAs lack directional strength far below the current level, reflecting the absence of directional conviction. Finally, technical indicators develop within negative levels but head nowhere. In the near term, and according to the 4-hour chart, EUR/USD is neutral-to-bearish. It has been trading between directionless 100 and 200 SMAs for over two weeks, with a flat 20 SMA in between. Technical indicators stand below their midlines without enough strength to confirm another leg south. Support levels: 1.0920 1.0875 1.0830 Resistance levels: 1.0980 1.1025 1.1060  

EUR/USD consolidates slightly above 1.0950 amid a holiday-truncated week. Investors' bets for rate cut by the Fed in March remain persistent. The ECB is done with hiking interest rates for now. EUR/USD remained inside Thursday's trading range of 1.0930-1.1000 in the Friday's trading session. The upside remained caped as the European Central Bank (ECB) announced an end to the elongated rate-tightening regime while stubbornly higher consumer price inflation in the United States provided cushion at the downside. The pair continues to trade listless inside Friday's trading range on Monday due to an extended weekend in the US economy amid Martin Luther King Birthday. The major is struggling to catch action despite the surprisingly softer US Producer Price Index (PPI) report for December. Producers at factory gates rose annual prices of goods and services at a slower pace of 1.0% against 1.3% as anticipated by investors. The core PPI that excludes volatile food and oil prices decelerated sharply to 1.8% vs. consensus of 1.9%. Bets supporting a rate cut by the Federal Reserve (Fed) in the March monetary policy meeting are persistently upbeat despite policymakers are endorsing them atleast after the first-half of this year. Fed policymakers need more evidence to confirm that price pressures are progressively declining towards the 2% target before jumping to rate-cut cycle. This week, market participants will keenly focus on the monthly US Retail Sales data for December. Investors have projected that consumer spending rose at a higher pace of 0.4% against 0.3% growth in November. Apart from that, Fed's Beige Book will be in focus. EUR/USD Technical Analysis EUR/USD trades in an Ascending Triangle chart pattern on an hourly scale, which indicates a sharp decline in volatility. The upside in the major currency pair remains restricted around the psychological figure of 1.1000 while upward-sloping trendline plotted from January 5 low at 1.0877 is providing support to the Euro bulls. The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, which indicates a consolidation ahead. The upside journey in the major currency could resume if the asset manages to climb above January 11 high at 1.1003, which will allow it to recapture five-month high around 1.1120. A breach of the latter would open upside towards 19 July 2023 low at 1.1174. On the flip side, a sell-off could occur if the asset drops below January 9 low of 1.0910. This could trigger a downside move towards 22 November 2023 low at 1.0825 and 5 November 2023 high near 1.0756.    

It's another week marked by US holidays, with Wall Street observing Martin Luther King Day today, so markets are getting off to a rather sluggish start in Asia. That said, there is a lot of geopolitical and macro noise in the market, so it's probably not the time to get over complacent, especially with consumer sentiment apt to get held hostage to the gnarly geopolitical scrim as policymakers, companies and investors struggle to operate in today's highly politically charged environment. Given the market has moved all in on March's rate cuts after evident pipeline disinflation in the PPI data, traders will be intently focused on Federal Reserve discussions and significant data releases from the world's largest economy this week. However, no major narrative shake-up is expected. Of course, a more robust retail sales number could slightly push back the odds of a March rate cut by the Fed, but unless the print is of the home run variety and one that knocks it right out of the park, it is unlikely to be a decisive game-changer. Geopolitically, tension rises following more US airstrikes on Yemen over the weekend, and domestically, President Biden faces challenges in foreign policy on two fronts: the Middle East and Taiwan. Both of these issues could weigh negatively on Consumer Sentiment. Given that probability preliminary read on the University of Michigan, sentiment for January will be front and center in traders' minds. Recall consumer sentiment and confidence were relatively buoyant last month thanks partly to meaningfully higher asset prices and declining inflation expectations. Xi Jinping might be grimacing after Taiwan elected Lai Ching-te for president, marking a third term for the Democratic Progressive Party. Voter turnout was 70%. Lai, who served as vice president since 2020, succeeds Tsai Ing-wen, who stepped aside due to term limits. Lai's victory is seen as a rebuke to Beijing, as he has been labelled a "troublemaker" by pro-China factions and a supporter of Taiwan's independence from The Chinese Communist Party. Lai emphasizes the preservation of democracy and is expected to follow Tsai's approach in deepening Taiwan's ties with Washington without actively seeking confrontation with Beijing. China may view the election results as a step toward conflict, as Xi Jinping maintains that reunification with Taiwan is a historical inevitability. Federal Reserve speakers include Barr, Bostic, Bowman, Williams, and notably, Waller—twice. Waller's previous remarks hinted at a dovish pivot, emphasizing the importance of rate cuts as inflation falls. But his is nothing earth-shattering and simply part of the FED policy that says if you cut as inflation falls to avoid the real policy rate rising mechanically. Hence, the market has at least and probably more than 75 pb Fed cuts to work with, given the calmer PCE deflator, the key Fed. inflation gauge. With market hawks moving into "can't beat them join the mode," an odds-on 80% March rate cut probability has been packed into the short-term swaps market. Globally, attention will be on China's activity data, especially in light of CPI figures showing Chinese consumer prices in deflation for a third consecutive month in December. The People's Bank of China PBoC may consider a key policy rate cut, and China will also release GDP figures.  

Gold price builds on last week's recovery early Monday on cautious optimism. The Dollar drifts lower amid sluggish US Treasury bond yields and US holiday. Gold price closed the week above 21-day SMA at $2,045, where next? Gold price is sitting near the highest level in five days above $2,050 in Asian trading on Monday, helped by a cautiously optimistic market mood, increased US Federal Reserve (Fed) bets for a March rate cut and a US holiday-led thin trading conditions.   Gold price stays supported amid wobbly US Dollar Gold price is capitalizing on persisting uncertainty in the market, as investors digest a bunch of the latest fundamental developments at the start of the week on Monday. The US Dollar is fluctuating between gains and losses, as the US Treasury bond yields trade listlessly amid light trading on account of the Martin Luther King Jr. Day holiday in the United States. On Friday, the US Dollar slipped from higher levels after the US Producer Price Index (PPI) unexpectedly fell in December, ramping up Fed March rate cut bets while dragging US Treasury bond yields lower. Market pricing now points to a 78% chance that the US central bank will begin easing rates in March, as compared to a 68% chance a week ago, according to the CME Group's FedWatch tool. Dovish Fed expectations remain supportive of the ongoing upswing in the Gold price. Markets, however, prefer to stay on a cautious footing ahead of the crucial Gross Domestic Product (GDP) from China, especially after the People's Bank of China (PBOC) surprised markets with no reduction to the Medium-Term Lending Facility (MLF) rate. Further, simmering tensions between China and Taiwan also keep investors on edge and the US Dollar broadly supported. Over the weekend, Taiwan's ruling Democratic Progressive Party (DPP) won the presidential election while losing its legislative majority. US Secretary of State Antony Blinken sent Taiwanese president-elect William Lai a message of congratulations following the result. In response, China's Foreign Ministry said, "China firmly opposes the US having any form of official interaction with Taiwan and interfering in Taiwan affairs in any way or under any pretext." Fresh reports of Iran-backed Houthi militants launching an anti-ship cruise missile at a US Navy ship could also act as a tailwind for the Gold price.   Later in the day, Gold price could maintain its buoyant tone, in the absence of any significant economic data and amid light trading. The main focus this week remains on Fed Governor Christopher Waller's speech, US Retail Sales data and Chinese quarterly GDP numbers. Gold price technical analysis: Daily chart The short-term technical outlook for Gold price remains in favor of buyers after the bright metal closed Friday above the 21-day Simple Moving Average (SMA) at $2,046, breaking the weekly range trade to the upside. The 14-day Relative Strength Index (RSI) indicator is looking firmer above the midline, suggesting that there is more scope to the upside for Gold price. Additionally, the 100- and 200-day SMA Bull Cross remains in play, supporting Gold price.  The immediate resistance is seen at the January 5 high of $2,06, above which the static resistance at $2,080 will be tested. If the upbeat momentum sustains, a retest of the $2,100 barrier cannot be ruled out. However, if Gold sellers lurk at higher levels and trigger a pullback, the 21-day SMA resistance-turned-support at $2,046 will be the initial contention point. A daily closing below the latter is critical to negating the renewed uptrend. The next downside target is seen at the 50-day SMA at $2,019. Ahead of that, Friday's low of $2,027 could offer some temporary respite to Gold buyers.

Currency markets traded 100 and 200 pips last week and the current week is slated for a repeat performance. Serious underperformers were found in the anchor pairs as EUR/USD traded 90 pips, DXY 69, AUD/USD 87 and 112 pips for GBP/USD. Wide rangers traded an average achievement at 200 pips beginning with GBP/AUD at 217 pips, EUR/AUD at 199 and GBP/NZD at 168. Market prices remain trading in 100 and 150 pip ranges and bouncing inside vital averages. The anchor pairs are responsible to lead markets by vital average breaks  in order to restore expanded ranges and normally traded markets. Inside most currency prices is pure Noise which means nothing happens to the traded price as it fails to produce trend results and only trades in tiny ranges. Prices desperately  require signals and variation. The only 2 trade options available are short overbought JPY cross pairs as GBP/JPY, EUR/JPY, CAD/JPY and CHF/JPY. The second option is enter longs and shorts at vital levels. GBP/USD for example top line this week and reported every week is located at 1.2788 and 1.2832 at the 5 year average. A short trade prevailed every week for the past 5 weeks at the upper levels. GBP/USD ranges trade the same 5 week story from 1.2597, 1.2621 Vs 1.2788 and 1.2832  Same for EUR/USD at 1.0895 to 1.1061 and 5 year average at 1.1155.AUD/USD 0.6639 and 0.6778 and NZD/USD 0.6161 t0 0.6293. USD/JPY lows this week are located at 143.85 and 143.54. Targets are located closer to 143.85. JPY cross pairs short remains the best trades as GBP/JPY targets 183.51 and EUR/JPY 158.36. GBP/CAD and EUR/CAD begin the week deeply overbought. EUR/CAD traded 115 pips last week Vs SPX 500 at 102 points. Oversold CHF cross pairs for the week include AUD/CHF, NZD/CHF and CAD/CHF. Wide rangers GBP/NZD and EUR/NZD trade short this week as well as GBP/AUD and EUR/AUD. Inflation Upon last release 6 weeks ago, informed Inflation was oversold. Inflation traveled higher. The current range is 6.10 to 2.20 and 1.90. Releases are valued at 0.03 which means expect 0.01 and 0.02 announcements. The last release at 3.4 just barely gave us 0.03 instead of the normal 0.01 and 0.02. Assuming the 2% target trades by the next 7 releases at 6 weeks per announcement then 7 X 6 = 42 weeks. This means the target might achieve 2% by the end of 2024. The BOJ also informs to the same 2% target for Japan Inflation at end 2024. From 2%, Inflation travels higher into 2025. If the Fed's goal is cut interest rates when Inflation achieves 2% then we have a long long way for the first drop.

Financial markets lift bets of a Federal Reserve rate cut in March despite US CPI data. European Central Bank has no extra room for rate hikes, unconfirmed pivot here. EUR/USD is losing its bullish potential, but a stronger slide is not yet clear. The EUR/USD pair is ending the week pretty much unchanged in the 1.0950 region, with investors feeling a bit disappointed after assessing the latest economic developments. Throughout the first half of the week, financial markets lacked directional momentum amid a scarce macroeconomic calendar and United States (US) first-tier data scheduled for Thursday. Economic developments in the United States and the Eurozone The US Dollar traded with a soft tone ahead of the release of the US Consumer Price Index (CPI) as investors hoped soft figures would keep the Federal Reserve (Fed) on the rate cut's path. However, the numbers surpassed the market expectations. The December CPI rates printed at 0.3% MoM and 3.4% YoY, higher than November readings. Finally, core annual inflation declined from 4% to 3.9%, still above the 3.8% anticipated. The news initially triggered concerns about the Fed's potential rate cuts. The US Dollar surged alongside government bond yields as stocks turned negative. Yet after the dust settled, speculative interest reconsidered, and resumed betting on a rate cut as soon as next March. The CME FedWatch Tool shows a 70% chance of a 25 basis points (bps) cut then, against roughly 60% odds ahead of the release. Further helping sentiment to recover, the US Producer Price Index (PPI) released on Friday came in softer than anticipated. The PPI contracted 0.1% MoM and rose 1.0% from a year earlier in December. The core annual rate posted 1.8%, below the 2% previous and the expected 1.9%. Meanwhile, the Euro was unable to capitalize on early USD weakness. Mixed European data suggested the recovery path is still long. Comments from European Central Bank (ECB) representatives were mostly hawkish but failed to provide a boost to the shared currency. Among the most notorious comments, ECB policymaker and head of the Bank of France Francois Villeroy de Galhau said  a rate cut is on the table in 2024 "as long as underlying fundamentals don't deliver any unforeseen surprises." Also, he clarified the ECB will stand pat until inflation expectations are "solidly anchored" at 2%. The ECB has reached its monetary policy pivot despite no official confirmation on the matter. President Christine Lagarde may likely keep the door open to additional hikes and reaffirm the data-dependent stance. Still, given the poor macroeconomic conditions and persistent price pressures, a rate cut in the EU may be closer than what the market believes. Policymakers in the spotlight With monetary policy meetings still far away, comments from officials will be highly watched in the upcoming days in search of fresh clues on whatever central banks may do next. In the meantime, the upcoming week will be light in terms of macroeconomic releases. The US will publish December Retail Sales and the preliminary estimate of the January  Michigan Consumer Sentiment Index. Across the pond, the Eurozone will offer the final estimates of the  December German and the  EU Harmonized Index of Consumer Prices (HICP). EUR/USD technical outlook The EUR/USD pair seems to be losing the bullish strength witnessed in December. It stands at the lower end of the previous week's range, and not far from the January low set at 1.0876. Technical readings in the weekly chart reflect the lack of directional conviction. EUR/USD stands below a flat 200 Simple Moving Average (SMA), providing dynamic resistance at around 1.1150. Meanwhile, the 20 and 100 SMAs also lack directional strength, with the shorter one at 1.0766, a potential bearish target should the pair break the aforementioned monthly low. Finally, technical indicators head nowhere, although holding within positive levels. The bearish case should be firmer on a slide below the 1.0800 figure. The daily chart suggests that EUR/USD could come under fresh selling pressure in the upcoming sessions. The pair has met sellers around its 20 SMA throughout the week, with the indicator losing its former upward strength, now flat around 1.0980. At the same time, the 100 and 200 SMAs remain directionless, far below the current level. The Momentum indicator gains modest downward strength within negative levels, while the Relative Strength Index indicator remains directionless around 53, suggesting bearish interest is not yet enough. EUR/USD peaked at 1.1000 earlier in January, the level to beat to shrug off the sour tone. Still, the pair would need to extend its recovery beyond 1.1120 to turn bullish. In the middle, intraday resistance lies around 1.1060.