Outlook: This week the star of the show will be the PCE price index on Thursday. Bloomberg reports a consensus forecast of 2.8% y/y from 2.9% in January. Even though the m/may go up, with headline up 0.3% and core a bigger 0.4%. Today we get new home sales and the Dallas Fed manufacturing survey for Feb, neither a noteworthy market-mover. Before then (tomorrow), we get consumer confidence and on Friday, the ISM manufacturing PMI, generally considered a bit better than the other one (from S&P). The Reserve Bank of New Zealand is imagined by some to be in hiking mode—both TD and ANZ call for a hike this time (Wednesday) and another one at the May meeting. Two other banks are calling for a hold. A recent survey by the central banks showed consumers are not anchored to falling inflation and the 2-year outlook is for a rise to 3.2% from 3.0%. Let's note once again that "expectations" are feelings, almost certainly not well informed, and feelings can be manipulated by strong words. It's possible the RBNZ just shouts hawkishly. We get CPI from Australia on Wednesday, possibly a tiny rise that would justify a seemingly hawkish RBA tone. We also get the eurozone flash CPI on Friday, and it may well come in nicely at 2.5% from 2.8% in Jan, with core down to 3% from 3.3%. It's not clear this will accelerate any rate cut bets, though. Every financial report today notes that the expectation of Fed rates cuts has gone from 6-7 a few months ago to barely 2-3 today and May having morphed into June—at best. One analysis from the well-regarded Bianco says if it's September or November, it will look "political" no matter what. We see three things in the pullback: first, the market went overboard in the first place and is now going overboard in the other direction. The no-cut crowd is still talking about the too-strong labor market, when the Fed has hinted or said out loud that it no longer sees employment data as determinative. For example, the drop in commercial bank lending is a clue that high rates are taking a toll. This is Lag at work. Second, the gloomy no-cut narrative seems to forget the power of rhetoric. Whatever the data, if enough Feds say they are satisfied the direction looks sustainable and they are backing away from cautiousness, the market knows how to read that. Third, there in nothing in the rule book that says the Fed (or any central bank) can't move between meetings. This is a remote possibility, but not out of the question. Bottom line—the rate cut mania went too far and now has gone too far in the other direction. A balance is due. Then there is one more thing—aside from Australia and New Zealand, the major central banks have all pretty much admitted the next move is rate cuts. We have to believe they are all talking to one another behind the scenes. They don't want to be seen to be cutting prematurely, but we would guess they still have June in mind and will try to herd the markets to that universal consensus—if only to avoid currency volatility. The BoJ is not the only one that dislikes FX volatility. This is a smell more than anything and hardly reliable, Forecast: The market is still correcting or "consolidating" with sentiment all over the place and any single big player capable of setting off a move or counter-move. Longer run, the US has the economic growth, the ostensibly sensible central bank, and the overall moxie to drive the dollar higher. Some forecast the dollar higher all year, although that seems to be going a bit too far. Again, logic is not the only or even the key factor in sentiment so we may be twiddling our thumbs for a while. Tidbit: If you are looking for economists to follow, we have two we like—John Authers, formerly at the FT and now at Bloomberg. And Goldman chief economist Jan Hatzius, who called the subprime 2008 crash and recession. Hatzius sees the soft landing this time working just fine. The Fed's 2% target for core PCE inflation will be approached very closely. The Goldman team created a financial conditions index that combines interest rates, bond yields, stock prices and the dollar. How we wish we could see it! You can get some briefings online but not the Big Papers. The WSJ ran a profile of Hatzius over the weekend, including the Goldman forecasts vs. the consensus. We like what little we can find about the Goldman forecasts because they tend to agree with our own (!). The most recent forecast holds that the latest jump in rents /housing costs from the BLS is an anomaly. This is...

XAU/USD Current price: $2,027.49 US Treasury yields are on the rise, giving near-term support to the USD. Investors are waiting for the US Core Personal Consumption Expenditures Price Index. XAU/USD gains bearish traction in the near term, but not everything is lost for bulls. Spot gold trades with a soft tone in the American session, extending its early decline to fresh intraday lows. The bright metal opened the week with a mild bearish gap but quickly filled it to stabilize around $2,035. XAU/USD currently trades below the $2,030 mark, as the US Dollar benefits from an increased caution. Stock markets trade mixed, reflecting the wait-and-see mood. US indexes consolidate near record highs but fail to extend gains ahead of critical macroeconomic releases scheduled throughout the week. Attention centers around the US Core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) favorite inflation gauge, after the unexpected uptick in the  January Consumer Price Index (CPI). Meanwhile, the USD is finding additional support in raising US Treasury bond yields, up following auctions. The 10-year note currently offers 4.299% after falling to 4.217% earlier in the day. XAU/USD short-term technical outlook The daily chart for XAU/USD  shows decreasing buying interest. The bright metal seesaws around a flat 20 Simple Moving Average (SMA) as technical indicators turn lower around their midlines. The bright metal is still developing well above a bullish 100 SMA, while the 200 SMA lacks directional strength well below the latter, suggesting bulls still have the chance to resize control. In the near term, and according to the 4-hour chart, however, the risk of a bearish extension increased. Technical indicators gain downward momentum below their midlines, while the pair is currently developing below its 20 SMA while struggling to retain ground above a directionless 200 SMA. The bearish case will be firmer if XAU/USD extends its slide through 2,019.60, the immediate support level.  Support levels: 2,019.60 2,011.40 1,995.35   Resistance levels: 2,032.50 2,045.20 2,064.90

EUR/USD Current price: 1.0853 Market participants await critical inflation figures for the United States and the Eurozone. European Central Bank President Christine Lagarde speaks about the ECB Annual Report. EUR/USD trades just below a Fibonacci resistance level with an increased upward momentum. The EUR/USD pair is marginally higher on Monday, trading in the 1.0850 price zone ahead of the United States (US) opening. The US Dollar is under selling pressure after struggling for direction on Friday, although major pairs remain within familiar levels. The market mood tumbled during Asian trading hours following news from late last week that Moody's Investors Services removed credit rantings from several Chinese companies, spurring concerns about the country's economic health. The sentiment improved partially in Europe, as most local indexes trade with gains, but investors remain cautious ahead of stellar inflation-related figures scheduled throughout the week. Next Thursday, the US will release the Core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) favorite inflation gauge. Also these days, Europe and Germany will unveil the preliminary estimates of the February Harmonized Index of Consumer Prices (HICP), while China will publish the official NBS Producer Manager Indexes (PMIs). In the near term, the focus is on the European Central Bank (ECB) President Christine Lagarde, who is due to speak about the ECB Annual Report in Strasbourg and US Treasury auctions in the American afternoon. EUR/USD short-term technical outlook The EUR/USD pair trades just below the 38.2% Fibonacci retracement of the 1.1139-1.0694 daily slump at 1.0865, and technical readings in the daily chart favor an upward extension. The pair met buyers around a mildly bullish 100 Simple Moving Average (SMA) while extending its gains beyond a directionless 200 SMA, the latter at 1.0825. At the same time, technical indicators aim north within positive levels, suggesting buyers retain control. For the near term, technical readings in the 4-hour chart also indicate that the risk skews to the upside. EUR/USD trades above all its moving averages, while the 20 SMA aims to cross above a mildly bearish 200 SMA. Technical indicators, in the meantime, turned sharply higher within positive levels, in line with another leg north. Support levels: 1.0825 1.0770 1.0720 Resistance levels: 1.0865 1.0910 1.0950

Core PCE, the Federal Reserve's preferred inflation gauge is the main event of the week. An update to US GDP in Q4 and January's Durable Goods Orders provides hard data. The forward-looking ISM Manufacturing PMI has the last word of the week. The calendar shows February 29 only once every four years – and this one also features the Fed's favorite inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index. That is the week's highlight, but there are several other market-moving events.   1) US Durable Goods Orders Tuesday, 13:30 GMT: How has investment kicked off in 2024? This report for January will shed some light. Various factors skew the headline figure, but the non-defense ex-aircraft one is "core of the core" and feeds into GDP calculations. Better data would boost the US Dollar and hurt Gold, but not necessarily hurt stocks. While rate hikes are adverse for shares, investment generally implies ongoing sales later on.   2) US GDP (second estimate) Wednesday, 13:30 GMT: The first release of growth data for the fourth quarter of 2023 showed a strong increase of 3.3% annualized. Any downgrade would provide some hope that the economy is not as hot as previously estimated, while an upgrade would increase fears of higher interest rates. Any reaction to the data will likely be short-lived, as it refers to the quarter that ended two months ago. The publication could serve as an opportunity to go contrarian.  3) German CPI Thursday, 13:00 GMT: The early release for February will provide an insight of inflation developments in Europe's largest economy. A re-acceleration is on the cards, and may boost the Euro. However, inflation has materially cooled in the old continent, and downside surprises cannot be ruled out. The release is set to have an impact beyond the Euro, as markets will be nervous toward the release of Core PCE in the US, and could shape up positions.  4) Core PCE Thursday, 13:30 GMT: This is what the Federal Reserve talks about when it talks about inflation. The Personal Consumption Expenditure (PCE) is considered a more accurate inflation gauge than the Consumer Price Index (CPI). Markets usually focus on CPI, as it is released earlier in the month, and also due to the strong correlation between CPI and PCE.  However, this time is different. After the hot CPI report, it is unclear if signs of re-accelerating inflation would also be reflected in the PCE report. Investors have come closer to the Fed's projection of cutting rates only three times in 2024, but not fully so. Core PCE, which excludes volatile energy and food items, is expected to have risen by 0.4% in February against the 0.2% increase seen in January. Any 0.1% deviation would make a significant difference for markets. Contrary to growth, orders and sales data, inflation figures are binary for all assets. Hotter data is adverse for stocks and Gold while boosting the US Dollar. On weaker data, the US Dollar would be the only loser while all others rise. 5) US ISM Manufacturing PMI Friday, 15:00 GMT: The first Friday of the month does not feature Nonfarm Payrolls for a change – but does provide a first insight ahead of the jobs report. The forward-looking ISM survey for the industrial sector is set to show a minor contraction on the headline. Markets will look at the employment component for a hint toward the NFP, and the Prices Paid component for insights on inflation. If the surprise in the Prices Paid component goes in the same direction as the Core PCE on the previous day, the impact would be greater than a figure in the other direction. 

EUR/USD holds comfortably above 1.0800 to start the new week. The pair could face next resistance at 1.0860 once it stabilizes above 1.0830. New Home Sales for January will be the only data featured in the US economic docket on Monday. Despite Friday's indecisive action, EUR/USD closed the previous week in positive territory. The pair continues to inch higher early Monday and the technical outlook suggests that the bullish bias remains intact. The US Dollar (USD) struggles to find demand in the European morning as US Treasury bond yields stretch lower. After losing nearly 2% on Friday, the benchmark 10-year US Treasury bond yield is already down another 1% on Monday, retreating toward 4.2%. Later in the day, the US Treasury will hold 5-year and 2-year note auctions. A pullback in high-yields in these auctions could put additional weight on the USD's shoulders. In the meantime, US stock index futures are down between 0.2% and 0.3% in the European session. Following the previous week's risk rally, a negative shift in market mood could help the USD stay resilient against its rivals. January New Home Sales will be the only data featured in the US economic docket, which is forecast to rise to 680,000 from 664,000. An unexpected decline in this data could highlight the negative impact of high interest rates on the real estate market and make it difficult for the USD to find demand with the immediate reaction. EUR/USD Technical Analysis EUR/USD started to edge higher after touching the ascending trend line support, currently located at around 1.0820. Additionally, the Relative Strength Index (RSI) indicator on the 4-hour chart rose to 60 after retreating toward 50 late Friday. Both of these developments suggest that buyers remain interested. The 200-period Simple Moving Average (SMA) at 1.0830 aligns as a pivot level for EUR/USD. Once the pair stabilizes above that level and confirms it as support, 1.0860 (Fibonacci 38.2% retracement of the latest downtrend) could be seen as the next resistance before 1.0900-1.0910 (psychological level, Fibonacci 50% retracement). If EUR/USD fails to clear 1.0830 and makes a 4-hour close below 1.0820, technical sellers could take action. In this scenario, 1.0800 (psychological level, Fibonacci 23.6% retracement) and 1.0780 (100-period SMA), could be seen as next support levels.

Gold price corrects further from two-week highs of $2,041 early Monday. US Dollar rebounds amid risk-aversion, despite falling US Treasury bond yields. Gold price could see a pullback after closing the week above the key 50-day SMA at $2,033. Gold price is reversing a part of the previous week's advance to two-week highs of $2,041 in Asian trading on Monday. Resurgent US Dollar demand and tepid risk sentiment are aiding the correction in Gold price. The downside in Gold price, however, could remain cushioned by the extended fall in the US US Treasury bond yields. Gold price stays defensive amid a quiet start to the week The US Dollar is drawing fresh haven demand, courtesy of fresh weakness in the Chinese stock markets, as geopolitical tensions resurface between China and Taiwan, as well as between Washington and Beijing. China's Commerce Ministry said on Monday, "the US falsely claims that China has created 'overcapacity', which fully reflects the US side's unilateralism and hegemonic behavior." Separately, China's authorities said that the Fujian Coast Guard is boosting patrols in waters near Taiwan's Kinmen islands "to strengthen law enforcement inspections in key areas." Investors also trade with caution ahead of a data-packed US calendar, with the Durable Good Orders data and the PCE inflation report to hog the limelight amid delayed Federal Reserve (Fed) interest rate cut bets. Markets are currently pricing in just about a 20% chance that the Fed could begin easing rates in May, much lower than an over 90% chance a month ago, according to the CME FedWatch Tool. For the June meeting, the probability for a rate cut now stands at about 70%, down from 77% seen a few days ago. The recent conflicting messages from Fed policymakers combined with mixed US economic data prompt traders to take profits on their US Dollar positions before the release of a fresh bunch of key statistics from the US this week. Last week, S&P US Global Manufacturing PMI rose to 51.5 from 50.7 in February while S&P Global Services PMI edged lower to 51.3 from 52.5. Further, risk-aversion has fuelled a fresh surge in demand for the US government bond, contributing to the extended weakness in the US Treasury bond yields across the curve. Softer US Treasury bond yields help limit the Gold price correction. In the day ahead, the dynamics of the US Dollar and the US Treasury bond yields alongside risk trends will influence the Gold price action, as traders look to the US New Home Sales data for some trading incentives. Gold price technical analysis: Daily chart The short-term technical outlook for Gold price remains constructive but a brief pullback cannot be ruled out in the upcoming sessions. The bright metal yielded a weekly closing above the crucial 50-day Simple Moving Average (SMA) hurdle at $2,033, keeping the bullish potential intact, backed by a falling wedge breakout seen last week. The 14-day Relative Strength Index (RSI), however, is inching lower to challenge the midline, justifying the latest leg down in Gold price. The immediate support is now seen at the 21-day SMA at $2,025, A failure to defend the latter could fuel a fresh downswing toward $2,007, the upwsrd-pointing 100-day SMA. Ahead of that, Friday's low of $2,016 could come to the rescue of Gold optimists. On the flip side, if Gold buyers fight back control, recapturing the 50-day SMA will be critical to targeting the February 7 high of $2,044 once again. The next upside barrier for Gold price is then seen at the $2,050 psychological barrier.

Following a thin economic docket last week, the final week of February will see a pick-up in data, particularly out of the US. All in all, it will be a busy week for the markets. US data in the spotlight Stateside, Tuesday's Consumer Confidence Index (released at 3:00 pm GMT) is expected to have improved in February, swayed by easing inflation and healthy employment. Thursday's Core Personal Consumption Expenditure (PCE) Price Index data will also be interesting (released at 1:30 pm GMT), specifically after January's CPI and PPI beats mid-month. Expectations, according to Bloomberg's median estimate, however, indicate a mixed bag, calling for a +0.4% increase (prior: +0.2%) between December 2023 and January (Est Range: +0.5%/+0.2%) while the year-over-year median estimate suggests core PCE inflation to ease to 2.8% from 2.9% in January (Est Range: +2.9%/+2.6%). The US ISM Manufacturing PMI should be one to watch on Friday at 3:00 pm GMT, albeit markets are not anticipating much change in the headline figure for February, expected to remain at around 49.1. Last week's S&P Global PMI series saw manufacturing and services indexes remain in expansionary territory. The former rose to 51.5 in February, smashing estimates of 50.5 and comfortably beating the prior of the upwardly revised 50.7 reading for January, signalling the 'sharpest upturn in the health of the goods-producing sector since September 2022', with the report also adding that expansion was bolstered by a 'return to output growth and quicker increases in new orders and employment'. Friday's event is a key economic indicator and one of the first to be released in a calendar month and, therefore, can elevate market volatility considerably. Although the ISM manufacturing component has remained in contractionary territory since late 2022, we have seen gradual improvement in recent months. Any upside surprise here could boost USD demand; conversely, softer data may weigh. In terms of Fed rate pricing, the futures and OIS curves are now far more aligned with the Fed's projections of three rate cuts this year, both showing around 83bps of easing priced in for the year (little more than three rate cuts). As of writing, it is about a 50/50 bet for a 25bp cut for the June meeting. Across the atlantic in Europe? Across the Atlantic, the flash (prelim) estimate for euro area inflation will be released on Friday at 10:00 am GMT, a report that will be broadly monitored that will either support or dash hopes that inflation is enroute to its 2% inflation target. Economists' estimates expect the year-over-year headline measure to be supportive and could encourage a dovish repricing; the median estimate indicates inflation to slow to 2.5% in February, down from 2.8% in January. Core inflation is also expected to cool year on year to around 3.0% from 3.3% over the same period amid healthier supply conditions and weakened demand. It is important to note that ahead of the euro area inflation release, we have regional inflation data to contend with that can help gauge what we'll be looking at on Friday. Regarding where the markets are in terms of rate pricing, it's a similar picture to the Fed: around 90bps of easing priced in for the year, with the first 25bp rate cut looking like it will be at June's policy-setting meeting. Asia pacific markets Aussie CPI inflation—the monthly CPI indicator—will also be one to keep an eye on this week on Wednesday at 12:30 am GMT. The consensus heading into the event suggests a slight uptick in the year-over-year inflation measure to 3.5% in January, up from 3.4% in December 2023. The Reserve Bank of New Zealand (RBNZ) will make the airwaves shortly after at 1:00 am GMT. Markets (OIS) are pricing a 70% probability for the central bank to hold the Official Cash Rate unchanged at 5.50%, marking the central bank's fifth consecutive no-change call. The last meeting at the end of November 2023 (the RBNZ only have seven meetings per year) maintained hawkish language and essentially was a hawkish surprise for markets amidst worries surrounding inflation; you may also recall that the RBNZ, unlike most global central banks who are on the doorstep of adopting an easing policy, communicated that if inflation were to come in hotter than expected, the central bank would likely need to tighten policy. Should a 25bp hike be seen next week (unlikely), we can expect the New Zealand dollar (NZD) to be bid; for any downside in the NZD, holding rates unchanged and abandoning hawkish communication would likely need to occur. G10 FX (5-Day Change):

An outstanding earnings report from the tech sector kept Euro afloat. United States' data indicated continued growth and a still-tight labor market. EUR/USD closed the week with gains, but bulls are still doubtful. The EUR/USD pair ended its losing streak and posted modest weekly gains to settle in the 1.0830 price zone on Friday, as investors continued to drop the Greenback. On the one hand, Euro gains were modest, as local data indicated persistent economic contraction, only backed by an upbeat market mood. On the other hand, the US Dollar was hit by cooling expectations of a change in the Federal Reserve's (Fed) wait-and-see stance. Data confirmed trouble in Europe The economic downturn in the Eurozone continued in February, according to the Hamburg Commercial Bank (HCOB) Producer Manager Indexes (PMIs). The February surveys showed a deceleration in the rate of contraction thanks to a relatively stable services sector offsetting the sharp decline in manufacturing activity. The HCOB Flash Eurozone Composite PMI rose modestly from 47.9 in January to 48.9 in February, as the manufacturing index contracted to 46.1 from the previous 46.6, while the Services PMI surged to 50 after printing at 48.4 in January. The situation seems even worse in Germany, as the downturn intensified in February. The HCOB Flash PMI fell to 46.1 from 47.0 in January. The manufacturing sector, in particular, experienced a sharp and accelerated reduction in output, with the index plummeting from  45.5 to  42.3. The contraction in the service sector was milder, as the Services PMI improved to 48.2 from 47.7. Finally, the country confirmed the Q4 Gross Domestic Product at -0.3% QoQ, as previously estimated. Furthermore, the European Central Bank  (ECB) monthly Consumer Expectation Survey showed consumers expect inflation to remain high for the next 12 months, with expectations rising to 3.3% in January from 3.2% in the previous month. The data confirmed what speculative interest already knew and had no relevant impact on the Euro.   United States resilience The United States (US) Federal Open Market Committee (FOMC) released the Minutes of its latest meeting, and the document showed policymakers that, while rate hikes are off the table, they won't move in the opposite direction until they gain "greater confidence" that inflation is receding. Other than that, Fed officials were generally optimistic about succeeding in their battle against price pressures, as despite elevated inflation, it was moving towards the central bank's 2% goal.  However, it is worth noting that the meeting took place before the release of a hotter-than-anticipated January Consumer Price Index (CPI). The figures undermined investors' confidence and pushed rate-cut bets towards June. S&P Global released the flash estimate of the US PMIs, which showed manufacturing activity expanded at the fastest pace since September 2022, with the index jumping to 51.5 from 50.7 in January. The services index printed at 51.3, shrinking from 52.5 previously and missing expectations of 52, while the Composite PMI was confirmed at 51.4, slightly below the 52 posted in January. Also, Initial Jobless Claims fell to 201,000 in the week ended February 16, its lowest in over a month, signaling that the labor market remains strong. Bottom line, US data was far more encouraging than European data, but was not enough to trigger US Dollar demand. The weekly wild card Much of what happened across the FX board resulted from sentiment, the latter coming from the solid performance of worldwide equities. Stock markets rallied, with several major indexes reaching record highs across the globe. The catalyst was Nvidia (NVDA), an American tech giant currently focused on generative AI, as the company reported upbeat earnings and revenues, boosting the tech sector. In the US, the Dow Jones Industrial Average and the S&P 500 closed at record highs on Thursday, while the Nasdaq Composite neared all-time highs. The optimism spread overseas, with the Japanese Nikkei 225 and the pan-European Stoxx 600 also hitting record levels. Stocks' strength helped EUR/USD remain green despite the economic strength imbalances between the United States and the Eurozone. The big question is whether optimism could be enough to limit the US Dollar's demand as government bond yields pressure multi-week highs. What's next on the macroeconomic front The US will publish January Durable Goods Orders and a revision of the Q4 Gross Domestic Product (GDP), which is expected to confirm an annualized growth of 3.3%. Things will turn more interesting on Thursday when the country will unveil the Core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) favorite inflation gauge. Core PCE inflation is expected to have risen by 0.4% MoM in January, doubling the 0.2% posted in December. Additionally, the February ISM Manufacturing PMI will be out on Friday.  Across the pond, the focus will be on inflation. Germany and the Eurozone will release their respective Harmonized Index of Consumer Prices...

Pound Sterling staged a comeback on the US Dollar pullback. US economic data and Fedspeak to dominate GBP/USD price action next week. Looking ahead, GBP/USD is set to extend its upswing so long as 200-day SMA holds. The Pound Sterling (GBP) booked the first weekly gain against the US Dollar (USD), snapping a five-week bearish momentum. GBP/USD staged a comeback from weekly lows to hit a fresh three-week high just above 1.2700. Pound Sterling benefits from sustained US Dollar weakness The sentiment around the US Federal Reserve (Fed) interest rate cut expectations drove the GBP/USD price action in the holiday-shortened week. The pair maintained the previous week's range, trading subdued on Monday, as American traders enjoyed a long weekend on account of the Presidents' Day holiday. Thereafter, GBP/USD picked up the recovery momentum, as the US Dollar maintained a submissive tone, despite increased bets for delayed Fed rate cuts amid hawkish FOMC Minutes and commentaries from Fed officials. Further, mixed US economic data releases combined with the AI optimism-led tech boost and global stock rally kept the downbeat tone intact around the US Dollar. US S&P Global Manufacturing PMI improved to 51.5 from 50.7 in February, while S&P Global Services PMI edged lower to 51.3 from 52.5. Meanwhile, US Initial Jobless Claims fell by 12,000 to 201,000 for the week ending February 17, the Labor Department reported Thursday. GBP/USD rallied as high as 1.2709 amid a sustained US Dollar retreat. Still, Pound Sterling sellers returned at higher levels as they weighed the dovish comments from Bank of England (BoE) Governor Andrew Bailey, delivered during his testimony before the UK Parliament's Treasury Select Committee (TSC) in the early part of the week. Bailey said, "we don't need inflation to be back at the target before cutting rates." "Markets expect rate cuts this year, we do not endorse the market curve, but it is not unreasonable for the market to think that," he added. The Pound Sterling struggled to hold on to its renewed upswing, as the downside in the US Dollar was cushioned by buoyant US Treasury bond yields. US yields drew support from the Fed policymakers' continued pushback against early and aggressive Fed rate cuts. Additionally, mixed S&P Global UK Manufacturing and Services PMI data also sapped the confidence of Pound Sterling buyers, especially after the UK economy entered a technical recession. The seasonally adjusted S&P Global/CIPS UK Manufacturing PMI improved slightly from 47.0 in January to 47.1 in February, below the market consensus of 47.5. Meanwhile, the Preliminary UK Services Business Activity Index stayed unchanged at 54.3 in February, beating the consensus forecast of 54.1. Week ahead: Top-tier US data in focus Following a holiday-shortened and relatively data-light week, GBP/USD traders look forward to a host of top-tier US economic data releases, as the UK calendar remains a quiet one. Monday will see a couple of BoE policymakers speaking, followed by the US New Home Sales data. BoE officials Sarah Breeden and Huw Pill will take up the rostrum. On Tuesday, the US Durable Goods Orders and Conference Board Consumer Confidence data will keep traders entertained. BoE policymaker Dave Ramsden will also make an appearance that day. The US docket will feature the second estimate of the fourth-quarter Gross Domestic Product (GDP) on Wednesday alongside the release of the Personal Spending and Personal Income data. The US weekly Jobless Claims will be reported on Thursday but the key focus will be on the Core Personal Consumption Expenditures (PCE) - Price Index, the Fed's preferred inflation gauge. Friday will be a busy day, with the final prints of the S&P Global UK and US Manufacturing PMI on the cards. However, the main event risk will be the ISM Manufacturing PMI. Markets will continue to closely scrutinize the speeches from the Fed policymakers for gauging the timing of the first-rate cut this year. GBP/USD: Technical Outlook The short-term outlook for GBP/USD suggests that the recovery momentum is likely to gather traction on a sustained break above the 50-day Simple Moving Average (SMA) at 1.2678. The 14-day Relative Strength Index (RSI) is sitting just above the 50 level, suggesting that there is more room for upside in the pair. If the Pound Sterling buyers manage to close the week above the 50-day SMA at 1.2678, a fresh uptrend could be initiated toward the 1.2750 psychological barrier. The next topside barrier for the pair is seen at the static resistance near 1.2775. The December 28 high of 1.2828 will be next on the buyers' radars. On a failure to close the week above the 50-day SMA of 1.2678, Pound Sterling could see a temporary pullback toward the 200-day SMA at 1.2570. However, the 21-day SMA at 1.2630 could offer some support to Pound Sterling buyers prior. A convincing break below the 200-day SMA...

Gold is having a tough time gathering directional momentum. US PCE inflation data from the US next week could help XAU/USD break out of its range. Key near-term resistance for the pair seems to have formed at $2,030. Gold (XAU/USD) fluctuated in a relatively narrow channel as it failed to benefit from the broad-based selling pressure surrounding the US Dollar (USD) this week. Nevertheless, XAU/USD ended up posting small weekly gains. Inflation data from the US will be watched closely by investors, but buyers could remain hesitant to bet on a steady uptrend until the pair stabilizes above $2,030. Gold price struggles to gather bullish momentum Gold edged higher on Monday but the yellow metal's gains were limited, with trading conditions remaining thin due to the Presidents' Day holiday in the US. Improving risk mood on Tuesday made it difficult for the USD to find demand and XAU/USD managed to post small daily gains. The Federal Reserve (Fed) said in the minutes of the January policy meeting on Wednesday that most policymakers noted the risks associated with moving too quickly to ease the policy. Furthermore, the publication showed that officials highlighted uncertainty around how long the restrictive policy stance would be needed. The benchmark 10-year US Treasury bond yield rose nearly 1% on the day and didn't allow Gold to build on its weekly gains. During the Asian trading hours on Thursday, risk flows started to dominate the action in financial markets, triggering a USD sell-off. Wall Street's main indexes opened decisively higher and the S&P 500 rose more than 1% to reach a new all-time high, while the Nasdaq Composite added 3% on the back of surging technology stocks. Later in the American session, upbeat US data releases allowed US yields to stretch higher and made it difficult for Gold to gather bullish momentum despite the broad-based USD weakness. The number of first-time applications for unemployment benefits declined by 12,000 to 201,000 in the week ending February 17, and S&P Global PMI surveys showed that business activity in the private sector continued to expand at a healthy pace in early February. In turn, the 10-year US yield reached its highest level since late November above 4.35%. In the meantime, Federal Reserve (Fed) Governor Christopher Waller said on Thursday that they are not in a rush to begin a reduction in interest rates, citing the need to see further evidence of inflation cooling. "Cutting too soon could squander inflation progress and risk considerable harm to the economy," Waller argued. The market reaction remained subdued ahead of the weekend and Gold remained within its weekly range on Friday. Gold price could react to US PCE inflation data next week The US economic docket will feature Durable Goods Orders data for January on Tuesday. On a monthly basis, Durable Goods Orders are forecast to decline 4.5% after staying unchanged in December. Although this data is unlikely to trigger a significant market reaction, an unexpected positive print could support the USD. The US Bureau of Economic Analysis (BEA) will release the second estimate of the Gross Domestic Product (GDP) growth for the fourth quarter of 2023 on Wednesday. Markets don't forecast a revision to the annualized 3.3% expansion announced in the initial estimate. On Thursday, January Personal Consumption Expenditures (PCE) Price Index data will be scrutinized by market participants. The Core PCE Price Index, the Federal Reserve's (Fed) preferred gauge of inflation, is seen rising 0.4% on a monthly basis following the 0.2% increase recorded in December.  Markets are fairly certain that the Fed will leave the policy rate unchanged at 5.25%-5.5% range at the March policy meeting. The probability of a rate cut in May currently stands at 20%, according to CME FedWatch Tool. The market positioning suggests that the USD doesn't have a lot of room on the upside even if the PCE inflation data confirms that there won't be a Fed policy pivot until June. On the other hand, a soft monthly Core PCE inflation reading of 0.2% or lower could revive expectations for a rate cut in May. In this scenario, US yields could push lower and allow Gold to gather bullish momentum. During the Asian trading hours on Friday, investors will pay close attention to NBS Manufacturing PMI and NBS Non-Manufacturing PMI data from China. In case both of these PMIs come in the expansion territory above 50, Gold could benefit from heightened optimism for an improving demand outlook. Gold technical outlook The Relative Strength Index (RSI) on the daily chart retreated to 50, reflecting a lack of bullish momentum. The Fibonacci 23.6% retracement of the latest uptrend forms a pivot level at $2,020. In case XAU/USD falls below this level and confirms it as resistance, it could encounter strong support at $2,005-$2,000 (100-day Simple Moving Average (SMA),...

EUR/USD holds steady above 1.0800 following Thursday's volatile action. Near-term technical outlook suggests that buyers remain interested. The US economic docket will not offer any high-impact data releases. EUR/USD reversed its direction after climbing toward 1.0900 on Thursday and closed the day virtually unchanged below 1.0850. The pair holds steady above 1.0800 in the European morning on Friday and the technical picture does not point to a buildup of bearish momentum. The positive shift seen in risk mood caused the US Dollar (USD) to weaken against its rivals in the first half of the day on Thursday. The data from the US, however, helped the US Treasury bond yields edge higher and supported the currency. The number of first-time applications for unemployment benefits declined to its lowest level since early January at 201,000 in the week ending February 17, down from 213,000 in the previous week. Additionally, S&P Global Composite PMI came in at 51.4 in February's advanced estimate. Although this reading was lower than January's 52, it showed that the private sector's economic activity remained in the expansion territory. Later in the European session, IFO will release the findings of the German business sentiment survey. Several European Central Bank (ECB) policymakers are scheduled to speak as well. The US economic docket will not offer any high-tier data releases. Following Thursday's risk rally, US stock index futures trade little changed early Friday. In case safe-haven flows return to markets after Wall Street's opening bell, EUR/USD could find it difficult to gather bullish momentum ahead of the weekend. On the other hand, an extension of the risk rally could help the pair regain traction. EUR/USD Technical Analysis EUR/USD retreated below the 200-period Simple Moving Average (SMA), currently located at 1.0830, on the 4-hour chart and closed the last 4 4-hour candles below that level. On an encouraging note for the bulls, the pair holds above the ascending trend line and the Relative Strength Index (RSI) indicator stays above 50. If EUR/USD manages to climb above 1.0830 and confirm that level as support, 1.0860 (Fibonacci 38.2% retracement of the latest downtrend) could be seen as the next bullish target ahead of 1.0900-1.0910 (psychological level, Fibonacci 50% retracement). On the downside, 1.0820 (ascending trend line) aligns as immediate support before 1.0800 (psychological level, Fibonacci 23.6% retracement) and 1.0780 (100-period SMA, 50-period SMA).

Rally from 10.3.2023 low in EURUSD is ongoing as a 5 waves impulse Elliott Wave Structure. Up from 10.3.2023 low, wave (1) ended at 1.11395 and pullback in wave (2) ended at 1.0694. Pair has turned higher in wave (3), but it needs to break above wave (1) at 1.11395 to rule out a double correction. Up from wave (2), wave (i) ended at 1.0785 and wave (ii) ended at 1.0731. Pair rallies higher in wave (iii) towards 1.0839 and pullback in wave (iv) ended at 1.0789. Final leg wave (v) ended at 1.088 which completed wave ((i)) in higher degree. EUR/USD 45 Minutes Elliott Wave chart Wave ((ii)) pullback is now in progress as a zigzag structure to correct cycle from 2.14.2024 low before pair resumes higher. Down from wave ((i)), wave (a) ended at 1.0802. Expect pair to rally in wave (b) then it should turn lower in wave (c) to finish wave ((ii)) in higher degree before pair resumes higher. As far as pivot at 1.0694 low stays intact, expect pullback to find support in 3, 7, or 11 swing for further upside. Due to the 5 swing structure from 2.14.2024, at minimum we should get another leg higher while it stays above 1.0694. EUR/USD Elliott Wave video