Global equity markets may face challenges in gaining ground early this week as the possibility of early interest rate cuts diminished in light of persistent inflationary pressures. While seasonal factors likely contributed to the inflationary trends, the uncertain state of the US economy has left macro traders in a cautious stance. With a relatively quiet week in terms of economic data, investors may find limited guidance in this regard. However, market participants will closely monitor statements from Federal Reserve officials, particularly in light of the recent overshoot in services inflation. This development may raise concerns within the Federal Reserve, especially considering Jerome Powell's apprehensions that services may not carry the baton once the disinflation effect of falling goods prices dissipates. Asia-Pacific markets opened mixed Tuesday as investors await an update on its key lending rates from China's central bank. As trading activity resumes in Asia on Tuesday and liquidity returns to normal post-US Presidents Day, investors will focus on whether Chinese markets can sustain their gradual recovery from recent lows and if Japan's stocks can reach levels not seen in over 30 years. The return of Chinese markets after the Lunar New Year break will be closely watched to gauge sentiment and investor appetite, especially amid ongoing concerns about the property and stock market slump. However, despite the solid official data indicating robust travel and spending during the Lunar New Year festivities, mainland Chinese equities did not experience significant gains when trading resumed after the holiday. Analysts were not swayed by what some Wall Street banks described as mediocre data, as they observed that tourist receipts declined by double digits compared to 2019 per capita. This suggests that investor sentiment is still affected by the prolonged property and stock market slump. The 1.2% gain in equities reportedly required ETF-buying by state funds late in the session, indicating intervention was required to support the market. Turnover in certain products, including funds tracking mid-sized and small firms associated with Beijing's support efforts, was notably high, a hallmark for recent state-supported rallies. At the same time, foreign investors were net sellers to the significant tune of 835 million real dollars. Many Asian countries struggle under tight financial conditions, especially those relying on US dollar-denominated funding. However, in Japan, financial conditions remain ultra-loose thanks to negative interest rates, booming stock markets, and a weaker JPY, where the dramatic wealth effect could stir inflation concerns in the halls of the Bank of Japan. Indeed, last week, Goldman Sachs' Japanese financial conditions index sank to a 34-year low. This underscores the sliding yen/booming stock market nexus and would appear to be inflationary. Could this be a catalyst to tip the scales for the Bank Of Japan to abandon yield curve Control, at a minimum? The upcoming 20-year bond auction in Japan on Tuesday is expected to attract heightened attention, particularly following the unexpected surge in demand witnessed from pension funds during a recent 10-year sale. This increased interest reflects a potential shift in sentiment among investors regarding longer-term Japanese government bonds. Moreover, Monday's auction of 12-month bills marked a significant development, with the first positive yield at auction since October 2014. This outcome signals a notable change in the prevailing market dynamics and underscores the evolving investor sentiment towards shorter-term Japanese government securities.

AUD/USD Current Price: 0.6538 Trading was choppy at the beginning of the week amid holidays in America. The Reserve Bank of Australia will publish the Minutes of its latest meeting. AUD/USD maintains its positive tone, aims to test the 0.6610 resistance level. The Australian Dollar benefited from the better tone of equities at the beginning of the week, posting modest gains against its American rival. AUD/USD traded as high as 0.6551, standing a handful of pips below the level ahead of the Asian opening. Activity across financial markets was limited amid holidays in the United States (US) and Canada, alongside a scarce macroeconomic calendar. Australia will open the macroeconomic calendar with the release of the Reserve Bank of Australia (RBA) Meeting Minutes. The central bank kept the Official Cash Rate (OCR) steady at 4.35% in its February meeting, and policymakers reiterated that they remain data-dependent. Additionally, officials maintained a mildly hawkish tone, indicating that "a further increase in interest rates cannot be ruled out."  The minutes could provide fresh clues on what the RBA Board plans to do next or even what policymakers need to feel more confident about inflation going down and begin trimming rates. Meanwhile, the People's Bank of China (PBoC) will announce its decision on Interest rates. The PBOC fixes the Loan Prime Rate (LPR) every month. AUD/USD short-term technical outlook The AUD/USD pair trades just below the 23.6% Fibonacci retracement of its latest daily slump measured between 0.6871 and 0.6442 at 0.6542. The 38.2% retracement of the mentioned decline comes at 0.6610, with a break above it required for a steeper recovery. Technically, the daily chart shows that a flat 100 Simple Moving Average (SMA) converges with a bearish 20 SMA, both near the mentioned Fibonacci resistance. At the same time, and despite the AUD/USD advancing for four days in a row, technical indicators remain directionless within negative levels, suggesting buying interest remains limited. In the near term, and according to the 4-hour chart, the risk skews to the upside despite a limited bullish momentum. AUD/USD develops above a bullish 20 SMA while meeting intraday buying around a flat 100 SMA. Technical indicators, in the meantime, eased from their recent highs but remain within positive levels with limited downward strength.   Support levels: 0.6500 0.6465 0.6430 Resistance levels: 0.6545 0.6580 0.6610 

Quiet start, but Nvidia earnings provide highlight of the week ahead. UK Rightmove HPI gains 0.9% in February. Markets continue to question rate pathway after recent inflation data. European markets have stumbled into a new week, with the habitual record highs set for the likes of the DAX and CAC holding off for the time being. Today brings a relatively quiet session for global markets, with national holidays in the US and Canada coming alongside a lack of any notable US earnings or economic data. Nonetheless, today's slow start belies the excitement ahead as AI posterchild Nvidia gear up to provide one of the most hotly anticipated reports of the quarter on Wednesday. Coming off the back of particularly impressive earnings and performance from Arm Holdings, bulls will hope that Nvidia can post numbers that continue to justify the lofty valuations that come with a stock that has gained 47% since the start of the year. The UK housing market came back into focus this morning, with the Rightmove House Price Index gaining another 0.9% in February. Coming off the back of a year that saw growing concerns that rising borrowing costs would result in a collapse within house prices, the strength seen over recent months help lift expectations that 2024 will bring higher transactions and valuations. With strong wage growth lifting average earnings, the housing market looks primed for a potential boost once the Bank of England normalise interest rates over the course of the year. Coming off the back of a week that was dominated by inflation data from the US and UK, market expectations around the monetary pathway for both the BoE and FOMC remains uncertain. Rising yields have highlighted the pushback after the initial expectations of a whopping seven rate cuts from the FOMC this year. Instead, it looks like the ECB and BoE could lead the way this year, with European disinflation set to ramp up over the coming months.  

XAU/USD Current price: $2,016.16 Most Asian and European indexes edged higher, indicating a better market mood. Financial markets await fresh clues from the Fed after hotter-than-expected US inflation. XAU/USD advances for a third consecutive day, could recover beyond $2,030. Spot Gold advanced throughout the first half of Monday amid absent demand for the US Dollar, resulting in XAU/USD extending its recovery to $2,023.04 a troy ounce. The Greenback found some near term demand by the end of the European session, with the pair currently trading at around $2,016, holding on to modest intraday gains. The week started in slow motion at the FX board as the macroeconomic calendar had little to offer, while holidays in Canada and the United States (US) weighed down the market volatility. However, Asian and European indexes provided interesting clues for speculative interest.  Chinese shares rose following the long New Year holiday, while the Nikkei 225 flirted with record highs, to end the day with modest losses. Across the pond, EU markets posted a mixed performance, with most indexes closing with modest gains, also holding near record levels. Financial markets seem to have digested the latest US inflation figures indicating heating price pressures in the worlds' largest economy. Both the Consumer Price Index (CPI) and the Producer Price Index (PPI) rose by more than anticipated in January, diluting the odds for a soon-to-come rate cut. Market participants are now waiting for the Federal Open Market Committee (FOMC) Meeting Minutes, to be released next Wednesday. The document could provide clues on a May potential cut, and trigger some volatile price action. XAU/USD short-term technical outlook XAU/USD is neutral, according to technical readings in the daily chart. The pair met sellers around a mildly bearish 20 Simple Moving Average (SMA), while extending its recovery from a bullish 100 SMA after testing it last week.  Technical indicators, in the meantime, lack directional strength just below their midlines, suggesting easing buying interest. In the near term, and according to the 4-hour chart, XAU/USD could recover further, particularly if it resumes its advance beyond the daily high. Technical indicators have corrected lower after nearing overbought readings, but remain well above their midlines with moderated bearish strength. At the same time, the 20 SMA heads firmly north below the current level, providing dynamic support at around $2,005.20. Finally, the longer moving averages have lost their downward strength, but remain well above the current level. Support levels: 2,005.20 1,990.00 1,976.50 Resistance levels: 2,023.10  2,032.50 2,045.20

EUR/USD Current price: 1.0776 Asian and European stock markets pressure record highs, weighing on USD demand. Holidays in the United States and Canada limit volatility among major pairs. EUR/USD holds within familiar levels without clear directional strength. The EUR/USD pair seesaws around the 1.0770 level, confined to a tight range on Monday. A light macroeconomic calendar and holidays in the United States (US) and Canada limit the market volatility. US markets will remain closed amid Presidents Day, with no activity in stocks or bonds. During European trading hours, the German Deutsche Bundesbank released the Buba Monthly Report, a document providing a detailed analysis of current and future economic conditions from the bank's viewpoint. The news was discouraging, as it indicated the economy is likely in a recession, noting weak external demand, muted consumption, and cautious investments as the reasons behind the setback. On a positive note, Asian and European indexes maintain a positive momentum, reflecting prevalent confidence among market participants. This week's focus will be on the Federal Open Market Committee (FOMC) Minutes, to be released on Wednesday. The Federal Reserve (Fed) announced its decision on monetary policy late in January and cooled down expectations for a March rate cut, triggering panic among market players. The document may shed light on whether a rate cut will come in May. EUR/USD short-term technical outlook The EUR/USD pair has made no progress after closing two consecutive weeks around the current level. From a technical point of view, the risk skews to the downside, according to the daily chart. The pair develops below all its moving averages, and the 20 Simple Moving Average (SMA) is about to cross below the 100 SMA, both converging in the 1.0790 price zone. Technical indicators, in the meantime, are neutral-to-bearish within negative levels, suggesting absent buying interest. For the near term, the 4-hour chart shows EUR/USD is meeting sellers around a mildly bearish 100 SMA, while a bullish 20 SMA keeps heading north below the current level. At the same time, technical indicators have pared their slides, turning neutral within positive levels. The case for a bullish extension will be stronger if the pair extends its advance beyond the 1.0840 level. Support levels: 1.0740 1.0695 1.0650 Resistance levels: 1.0795 1.0840 1.0885 

EUR/USD edges higher toward 1.0800 to start the week. Technical buyers could take action once 1.0800 is confirmed as support. US markets will remain closed in observance of the Presidents' Day holiday. After closing the previous week marginally lower, EUR/USD gained traction early Monday and advanced toward 1.0800. In case the pair stabilizes above that level, it could extend its recovery in the near term. The data from the US showed on Friday that the Producer Price Index (PPI) rose at a stronger pace than expected in January. Although the immediate reaction provided a boost to the US Dollar (USD), the currency struggled to preserve its strength later in the American session.  The economic calendar will not feature any macroeconomic data releases that could influence EUR/USD's action later in the day. Germany's Bundesbank is scheduled to release its monthly report, which is likely to be ignored by participants. Stock and bond markets in the US will remain closed in observance of the Presidents' Day holiday on Monday. Hence, thin trading conditions could make it difficult for EUR/USD to gather directional momentum in the second half of the day. Later in the week, preliminary Manufacturing and Services PMI reports from Germany and the Euro area will be scrutinized by investors. EUR/USD Technical Analysis The Relative Strength Index (RSI) indicator on the 4-hour chart rose to 60, pointing to a bullish tilt in the short-term technical bias. 1.0800 (Fibonacci 23.6% retracement of the latest downtrend, psychological level) aligns as key resistance for EUR/USD. In case the pair climbs above that level and confirms it as support, 1.0850-1.0860 (200-period Simple Moving Average (SMA), Fibonacci 38.2%retracement) and 1.090 (psychological level, Fibonacci 50% retracement) could be seen as next bullish targets. On the downside, first support area seems to have formed at 1.0760-1.0750 (50-period SMA, 20-period SMA) ahead of 1.0700. This article was corrected at 08:05 GMT to say in the second bullet point "technical buyers could take action once 1.0800 is confirmed as support," not resistance.

Expectations for relative Mid-East calm and a US bank holiday imply a seemingly calm start to the week. The FOMC Meeting Minutes stand out as investors fear higher rates for longer. Jobless claims and forward-looking PMIs promise a turbulent Thursday in markets.  Only three? Yes, this week is lighter on big events – and begins with a US bank holiday on Monday. The Middle East could always provide surprises, but the chances of big developments this week are lower. A senior Israeli minister warned that without the release of hostages before the beginning of Ramadan on March 10, the military would enter Rafah, the last major town at the southern tip of the Gaza Strip. This stated deadline means a lower chance of action now.  That leaves US developments to dominate the scene. Here are the main events for the week: 1) FOMC Meeting Minutes Wednesday, 19:00 GMT. The Federal Reserve clarified that it intends to leave rates unchanged in March, contrary to market hopes for a cut. Fed Chair Powell downed markets in the latest decision in late January; since then, data has been strong. Bond markets seem to have received the message, but stocks remain elevated. The bank might prefer to reiterate these hawkish messages in the minutes – which are redacted until the last moment to convey a message to investors. If the tone is hawkish, stocks would slide, Gold would struggle, and the US Dollar would rise. However, such a move would not last too long, as a slow path of rate cuts is already priced. If the bank surprises with a relatively calm or even dovish message, there is room for the US Dollar to fall, Gold to rise, and stocks to surge. In such a case, which is less likely, the move would be sustained, as it would surprise markets.  2) Jobless claims Thursday, 13:30 GMT. The absence of big events allows this weekly barometer of the labor market to shine. Fed officials would begin slashing rates faster if unemployment rises. The economic calendar points to a minor advance from 212K to 217K. A jump to 230K or above would create worries of a downturn – and hopes for rate cuts. A drop to 200K or below would cause the labor market to remain resilient and depress any hopes for earlier cuts.  3) Flash PMIs Thursday, 14:45 GMT: S&P Global's forward-looking surveys may provide some clues about the direction of the US economy. The Manufacturing Purchasing Managers' Index stood at 50.7 points in January, close to the 50-point threshold separating expansion from contraction. The Services PMI stood at 52.5. If both dip below 50, it would create worries about a recession and hopes for lower rates. If both hold up or rise, it would show resilience. I expect upbeat figures, with manufacturing potentially catching up with services, as investment in the industry remains robust. 

It is safe to say it has been an energetic start to the year, underscoring meaningful shifts in the economic landscape and rate expectations. Last week delivered a busy slate of tier-1 risk events; this week's economic calendar, however, offers a lighter docket. Monday is poised to be a snooze. Void of tier-1 numbers and US banks closing in observance of Presidents' Day, volatility is likely to slow heading into US trading hours. RBA minutes The Reserve Bank of Australia (RBA) minutes will be released on Tuesday at 12:30 am GMT and could be one worth observing for Asia Pac traders, though it is doubtful we'll see much more than what we already know. You may recall that the central bank left the Cash Rate unchanged at 4.35% at its first policy-setting meeting this year, a 12-year high. In addition, the accompanying Rate Statement pencilled in a fresh line noting that further policy tightening 'cannot be ruled out'. However, on the other side of the fence, according to the Statement of Monetary Policy (SoMP), the central bank's projections announced a downward revision to its growth and inflation forecast, alongside higher unemployment. The RBA anticipates CPI inflation (as well as trimmed-mean inflation) to cool to 2.8% by the end of 2025 (November's forecast: 2.9%) and (for CPI inflation) to slow to 3.2% at the end of 2024 (November's forecast: 3.5%). Unemployment will peak at 4.4% in mid-2025 and hold at this level until the year-end, with GDP growth expected to be at 2.1% in mid-2025 (down from November's 2.2% reading). Fed minutes The minutes from the latest FOMC rate decision will be on the watchlists for many this week on Wednesday at 7:00 pm GMT. Last week's hotter-than-expected US CPI data (inflation continues to cool but not as fast as we expected) reinforced the dollar and witnessed an unwind in Fed rate-cut pricing, consequently bringing market expectations more in line with the Fed. In the latest SEP, you may remember that the Fed projects only three rate cuts this year. Hence, we head into the minutes with not only elevated inflationary pressures but also resilient economic GDP growth and a tight labour market. As a result, the recent dovish repricing should not raise too many eyebrows. According to the futures market, the first 25bp rate cut is now priced out to June (March is all but a sealed deal for another no-change with only a 10% probability of a 25bp cut), with 93bps of easing forecast for the year ahead (just shy of four rate cuts). The last Fed policy meeting at the end of January revealed a language change in the Rate Statement, striking a line through a familiar sentence that referenced the central bank's readiness to increase rates: '… additional policy firming that may be appropriate to return inflation to 2 percent over time'. While dropping this sentence suggests a dovish shift, the substitute delivered a hawkish vibe to the proceedings, signifying that the central bank is not rushing to cut rates until inflation has further softened. Ultimately, another pushback against a March cut could be seen in the minutes, which would be logical at this point and may bolster demand for the dollar in the short term. With that being said, in the event of a lack of any fresh insights from the minutes (the most likely course), the report might be difficult to trade with any conviction. February PMIs Thursday will see the release of PMIs from the eurozone (9:00 am GMT), the UK (9:30 am) and the US (2:45 pm). In the UK, last week directed the spotlight to a slew of tier-1 economic numbers, including wages, which came in higher than expected, as well as CPI inflation and GDP data revealing larger-than-expected misses which weighed on sterling (MTD, GBP is down -0.7% against the US dollar). The latest GDP data also elbowed the UK into a mild technical recession (to be frank, the UK economy [as well as the euro zone] has been stagnating for several quarters). The week wrapped up with retail sales rebounding across the board in January. Therefore, this week's UK business surveys will be widely monitored. On the service side of the PMIs, we entered expansionary territory in late 2023 after a pickup. Manufacturing, however, remains in contractionary territory, though less so than it was in mid-2023: contracting at a slower pace. Market consensus as of writing is for the services PMI to tick slightly higher to 54.4 in February from January's 54.3, while the manufacturing PMI is forecast to rise to 47.5 in February from 47.0 in January. As most are aware, the PMIs can move the market's needle quite significantly if out-of-consensus prints are observed. Following the CPI and GDP miss and given sterling failed to rally beyond the $1.26 handle on Friday on...

Summary We wrote reports in 2016 and again in 2019 to determine if election periods had a significant impact on U.S. economic activity. With the 2024 presidential election right around the corner, we revisit that analysis. Initial theories suggested that elections positively impact the economy through the actions of politicians, who may try to stimulate it as a part of their re-election campaigns. More recent theory, however, implies the opposite, suggesting that elections weigh on near-term economic growth, as individuals and businesses may delay large purchases or investments in the face of political uncertainty. Our analysis in 2016 and again in 2019 did not find evidence of weaker economic growth in the 18 presidential election years that occurred between 1948 and 2016. In fact, we found that growth rates of real GDP, real consumer spending and real business investment spending were stronger during presidential election years than non-election years. Did elected officials "juice" the economy via stimulative fiscal policy to improve their electoral prospects? Apparently not. Our 2016 analysis did not find a statistically significant difference between growth in real government spending in election years compared to non-election years. We forecast the U.S. economy will continue to expand in 2024, albeit at a sluggish pace due to the current restrictive stance of monetary policy. Given the findings of our previous analyses, we suspect that this year's election will not have a material effect on the U.S. economy in 2024. Download The Full Special Commentary

Gold price extends its recovery mode at the start of the week on Monday. US Dollar eases with Treasury bond yields, as investors reassess Fed rate cut bets.  Gold buyers need to crack the 21-day SMA at $2,025. RSI steadies below the 50 level.   Gold price sets off the new week on the front foot, as buyers extend the previous week's recovery mode into Monday. The upward trajectory in the Gold price is powered by a broadly softer US Dollar (USD), tracking the US Treasury bond yields lower amid a mixed market sentiment. Gold price extends recovery gains Chinese traders return to markets with full optimism after a week-long Lunar New Year holiday but rest of the Asian equity markets trade with caution. Investors reassess the US Federal Reserve (Fed) interest rate cut expectations, especially after hot US Consumer Price Index (CPI) and Producer Price Index (PPI) data came in hotter-than-expected and helped push back their expectations of a Fed rate cut from March to June. Markets are currently pricing a 77% chance of a cut in June, the CME Group's Fed Watch Tool shows. Despite hopes for a delayed Fed rate cut than previously expected, the non-yielding Gold price remains resilient and resumes its recovery momentum, in the face of a broad-based US Dollar softness. The Greenback remains on the defensive at the start of the new week, as traders resort to repositioning ahead of Wednesday's Minutes of the February Fed meeting. Further, a US market holiday on Monday, in observance of Presidents' Day, leaves the US Dollar at the mercy of risk sentiment. Additionally, Gold price is taking advantage of a sluggish performance in the US Treasury bond yields and geopolitical tensions in the Middle East. The latest developments include news of a Belize-flagged, UK-registered and Lebanese-operated ship that was attacked in the Bab al-Mandab Strait, Red Sea. Meanwhile, global growth fears also continue to act as a tailwind for the traditional safe-haven Gold price. Last week, Gross Domestic Product (GDP) data from the UK and Japan showed that both economies slipped into technical recession after reporting two consecutive quarters of negative growth. Looking ahead, Gold price is likely to hold onto its upswing from the two-month low of $1,984, with an exaggerated move not ruled out amid holiday-thinned trading conditions. The key focus this week remains on Wednesday's Fed Minutes and US S&P Global business PMI data on Thursday. Gold price technical analysis: Daily chart As observed on the daily chart, Gold price needs acceptance above the 21-day Simple Moving Average (SMA), now at $2,025 on a daily closing basis to stretch the recovery. The 14-day Relative Strength Index (RSI) is also following the recovery mode, testing the midline for the upside. If the RSI indicator manages to yield a sustained break above the midline, the tide could change in favor of Gold buyers. The next upside barrier is seen at the 50-day SMA of $2,032 if the 21-day SMA at $2,025 is taken out convincingly. Further up, the February 7 high of $2,044 will test bearish commitments, if Gold price eyes the $2,050 psychological barrier. Alternatively, rejection above the 21-day SMA could recall Gold sellers, with immediate support seen at the daily low of $2,011. If the latter gives way, a retest of the $2,000 threshold will be on the cards. The last line of defense for Gold buyers will be the 100-day SMA at $1,998, which defended Gold price throughout the previous week.

When EUR/USD dropped 8 weeks ago on December 23 from 1.1138, the 5 year average was located at 1.1160. The initial respomse for the next 2 weeks was trade lower by 134 then 162 pips. The week of January 6 began and for the next 6 weeks, EUR/USD ranges severely compressed. EUR/USD traded its best week at 123 pips during the week of January 13. EUR/USD traded 110 pips last week and  73 for the prior week. For the past 8 weeks, EUR/USD averaged 115 pips per week and 105 pips for the last 6 weeks. DXY from the 100.00 bottom 8 weeks ago traveled higher for the next 2 weeks by 115 then 176 pips then ranges assumed severe compression.  For the past 8 weeks, DXY averaged 111 pips per week and 100 pips for the last 6 weeks. EUR/USD traded 500 pips lower and straight down while DXY progressed 500 pips higher. EUR/USD achieved its destination but at a much slower pace than normal as 100 pip weeks for EUR/USD is far outside the 150 and 200 pip norm. Posted December 21 and 24 to EUR/USD levels. 1.0590, 1.0680, 1.0828, 1.0878, , 1.1056, 1.1160, 1.1273, 1.1521. EUR/USD' s low achieved last week at 1.0594 at 8 weeks later and well within the trade bounds. The answer to tiny EUR/USD ranges occurred 4 weeks ago when EUR/USD broke below 1.0800's. The 148 pip range from 1.0828 to 1.0680 began to not only compress as EUR/USD traded lower but EUR/USD became more oversold with every traded pip drop. The opposite is true for DXY as overbought began at 102.00's and 101.00 but DXY traveled higher despite overbought and ranges became compressed with every traded pip higher. The 2nd EUR/USD and DXY problem is located at the interest rates of the ECB and FED as neither the ECB nor Fed rates moved since November. The USD 10 year yield ranged 0.52 points and 0.45 for the German bond. What slowed prices over the past 6 and 8 weeks was a combination of zero interest rate moves and range compression to EUR/USD and DXY. Overall, EUR/USD dropped from the 5 year average at 1.1160 as DXY rose from the 50 year average at 99.00's. EUR/USD at 1.0700's trades deeply oversold. The overall problem is the 5 year average now at 1.1144 and 10 year at 1.1399. EUR/USD updates for next months are located at 1.0723, 1.0738, 1.0806, 1.0898, 1.1057, 1.1144, 1.1262, 1.1399 and 1.1507. EUR/USD targets: 1.0859, 1.0911 and 1.0980. EUR/USD's best trade range at 159 pips is located from 1.0898 to 1.1057. For EUR/USD to break the 5 year average, DXY must trade below 99.00's. The week USD/JPY first targets 149.19 then lower. The true expert commentators in Japan have much to say to USD/JPY as the 150.00 levels is far to high and stifles comsumer demand coupled with above 2% Inflation levels. On a possible lift of negative interest rates to positive, the current JGB yield at 0.73 travels to 1.0. Japanese banks overwhemingly favors the BOJ to assume positive interest rates as trading profits and interest income massively increases. Oversold in the EUR/USD universe includes EUR/AUD, EUR/CAD, EUR/NZD and EUR/GBP. GBP/JPY targets easily 188.20, EUR/JPY 160.82 and CAD/JPY 110.66. All easy targes to achive and all severely overbought. GBP/USD updates for next months: 1.2454, 1.2603, 1.2630, 1.2797, 1.2826, 1.3149, 1.3542. The 5 year average at 1.2826 bumps against 1.2797 and 1.3542 represents the 10 year average. AUD/USD higher must break 0.6448. GBP/AUD traded to target on Friday at 1.9267 and just prior to the big break at 1.9243. The longer term target remains 1.8700's. Lower must cross below 1.9246. Both EUR/AUD and GBP/AUD begin the week oversold. EUR/NZD and GBP/NZD also trade oversold and heading higher this week. USD./CAD sits just below vital 1.3487 and must cross to trade 1.3518. Currency market prices remain in severe compression mode and the results this week will materialize the same as the past 6 and 8 weeks.

The United States Consumer Price Index rose by more than anticipated in January. The European Central Bank keeps cooling down rate cut expectations. EUR/USD keeps posting lower lows, anticipating more slides in the coming days. The EUR/USD pair is ending a second consecutive week little changed at around 1.0750, although it posted a fresh low for 2024 of 1.0694. The US Dollar soared on Tuesday as the United States (US) reported an uptick in inflation at the beginning of the year. Hot CPI reaffirms Federal Reserve's caution The US Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) increased 0.3% MoM and 3.1% YoY in January, surpassing the market expectations. Core figures came in at 0.4% and 3.9%, respectively, higher than anticipated. Market participants entered panic mode with the news, as combined with the latest solid Nonfarm Payrolls (NFP) report, inflation numbers confirmed the Federal Reserve's (Fed) stance of maintaining interest rates at record highs for longer and taking more time to process data before loosening monetary policy by trimming interest rates. In its latest monetary policy meeting, the central bank clarified that there is no rush to cut rates. Chair Jerome Powell disregarded a March cut, and bets were moved to May, but the latter decreased after the CPI's unexpected advance. According to the CME FedWatch Tool, odds for a May cut fell to 34.6% after peaking at 52.2% in the Fed's meeting aftermath. Meanwhile, policymakers flood the wires. Fed officials confirmed Powell's posture, optimistic about the economic performance, yet at the same time cautious about changing the monetary policy too fast. Generally speaking, officials noted that progress is being made on inflation, but they need more data before taking the next step. The latest speakers summed it up quite clearly. On the one hand, Fed Vice Chair for Supervision Michael Barr declared the central bank remains confident that US inflation is on the way to hitting the Fed's 2% target, although adding that it is too early to say there will be a soft landing and affirming he needs to see continued good data before advocating for rate cuts. On the other hand, Federal Reserve Bank of Atlanta President Raphael Bostic noted that the Fed faces no urgency to cut rates given the current strong economy, which "argues for patience in adjusting monetary policy." Tepid European data fuels European Central Bank concerns Across the pond, Eurozone data failed to impress, to say the least. The German ZEW Survey on Economic Sentiment improved in February, although the assessment of the current situation plummeted to  -81.7. Also, the EU reported the December Trade Balance posted a surplus of €16.8 billion, down from the previous €20.3 billion and missing expectations. On a positive note, Industrial Production rebounded in December, up 2.6% against the 0.2% decline expected. In other order of news,  the European Commission released the latest Economic Growth Forecasts,  downgrading growth perspectives to 0.9% for the EU and 0.8% for the euro area.  However, inflation is predicted to ease further, as the Harmonised Index of Consumer Prices (HICP) inflation in the EU is set to decline faster from a steep 6.3% in 2023 to 3.0% in 2024, further dropping to 2.5% in 2025. Finally,  European Central Bank (ECB) President Christine Lagarde testified before the Committee on Economic and Monetary Affairs of the European Parliament. Lagarde repeated that the central bank still needs more information before it can affirm inflation is heading back toward the desired 2% target.  "The latest data confirms the ongoing disinflation process and is expected to bring us gradually further down over 2024," Lagarde said. She also added that the Governing Council needs additional data to determine whether the decline is sustainable in time. Finally, she noted that wage growth remains strong and could affect inflation dynamics. ECB officials throughout the week backed her cautious message. Lagarde was forced to admit rate cuts could come in the European summer, back when she assisted the Davos forum, but the case for a rate cut in the first half of the year is quite weak. Clues from stocks and yields  Following the release of the US CPI, stocks plummeted, and government bond yields soared to multi-week highs, reflecting market concerns about economic health and persistently high rates. The movements slowly reverted throughout Wednesday and Thursday, but stocks´ decline and yields' strength returned ahead of the weekly close following the release of fresh US inflation-related data. The country released the January Producer Price Index (PPI), which rose more than anticipated. The PPI rose 0.9% YoY, easing from the previous 1% but above the 0.6% expected. The core annual reading rose 2%, up from a previously revised 1.8%. Ahead of the weekly close, the 10-year Treasury yield is reaching fresh highs beyond the 4.30% mark, pushing the US...