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EUR/USD Stabilizes After Hitting 2-Month LowsThe EUR/USD pair has managed to stabilize after the sharp sell-off suffered on Tuesday on the back of hawkish words from Federal Reserve Chairman before the U.S. Congress. After hitting a two-month low of 1.0524, the EUR/USD pair found support at the 100-day Simple Moving Average (SMA) and recovered a few pips. At the time of writing, the pair is trading at the 1.0545 area, virtually unchanged since opening. On Tuesday, Federal Reserve Chair Jerome Powell testified before the U.S. Senate and stated the FOMC is willing to accelerate the pace of rate increases given that macroeconomic figures have been better than expected, but inflation remains far above the Fed’s target of 2%. Powell will speak before the House of Representatives later in the session. The hawkish message lifted expectations that the Fed might hike by 50 bps at the March 21, 22 meeting, triggering a rally of the dollar and boosting short-term Treasury yields. The 2-year rate reached a 15-year peak at 5.085% on Wednesday. Meanwhile, ahead of the critical nonfarm payrolls employment report (Friday), ADP data showed the U.S. private sector added 242,000 new jobs in February, surpassing expectations of a 200,000 increase. The strong job gain further fuels expectations that the central bank will act more aggressively this time around. From a technical perspective, the EUR/USD maintains a short-term bearish bias, according to indicators on the daily chart, with the RSI below its midline and the MACD printing higher red bars. At the same time, the price hovers below the 20-day SMA while threatening to break below the 100-day SMA. Loss of the latter, currently around 1.0525, will risk a steeper decline targeting January lows at 1.0480. On the flip side, the immediate resistance area is seen at 1.0600, followed by the 20-day SMA at 1.0640 and the 1.0700 psychological level. A recovery of this hurdle could ease the immediate pressure on the euro.
by Alex_Boltyan_FXAnalyst
Gold Pressured by Powell's Testimony, Approaches $1,800 Support Gold prices came under pressure on Tuesday as the U.S. dollar strengthened across the board following the Federal Reserve Chair's semi-annual testimony before the Senate. At the time of writing, the spot price XAU/USD is trading at $1,818 an ounce, 1.55% lower on the day, having hit a one-week low of $1,815. The U.S. dollar rallied on the back of hawkish remarks from Fed's Chair Jerome Powell. In a hearing before the Senate, he signaled his willingness to raise rates at a faster pace. He noted that the ultimate level of interest rates is likely to be higher than previously anticipated, given that the latest economic data have come in stronger than expected. The next round of data, including February nonfarm payrolls and inflation numbers, will likely determine whether the Federal Reserve will opt for a 25 or a 50 bps rate hike at the March 21, 22 FOMC meeting. After the testimony, Wall Street indexes plunged while short-term Treasury yields jumped, with the 2-year note rate reaching its highest level in 15 years at 4.979%. Higher yields further boosted the dollar, weighing on XAU/USD. From a technical perspective, the XAU/USD short-term bias has turned bearish according to indicators on the daily chart, which have accelerated south, while the price broke below the 20-day Simple Moving Average (SMA) and approaches the $1,800 psychological level, critical short-term support point. A break below the latter could open the door to a deeper decline targeting the 200-day SMA at around $1,775. On the other hand, the immediate resistance area is seen at the $1,845-50 region, followed by the weekly highs at the $1,860 zone.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
EUR/USD Starts the Week on a Strong Note Ahead of Key EventsThe EUR/USD pair advanced at the begging of the week extending Friday's gains as the U.S. dollar weakened across the board as investors await the Federal Reserve Chair's testimony before Congress and the nonfarm payrolls report. At the time of writing, the EUR/USD pair is trading at the 1.0685 area, 0.5% above its opening price, having posted a two-week high of 1.0694 before retreating. At the same time, the dollar, measured by the DXY index, hovers around five-day lows at the 104.25 zone, 0.23% lower on the day. The euro strengthened despite lower-than-expected data. In the Eurozone, the Sentix Investor Confidence index fell to -11.1 in March from its previous reading of -8. Separated data showed retail sales expanded 0.3% in February, way below the consensus of a 1% rise. At the same time, lower U.S. Treasury yields weighed on the greenback as investors' attention turns to Federal Reserve Chair Jerome Powell's testimony before the U.S. Congress. The 10-year note offers 3.96%, while the 2- and 5-year bonds are yielding 4.87% and 4.25%, respectively. Meanwhile, Wall Street indexes traded slightly higher, reflecting the better market mood. From a technical perspective, the EUR/USD pair holds a short-term neutral stance, with indicators on the daily chart around their midlines, while the price has advanced beyond the 20-day Simple Moving Average (SMA), improving the outlook. On the upside, the immediate resistance level stands at the 1.0700 psychological mark and then the February monthly high of 1.0804. On the downside, supports line up at 1.0600, followed by 1.0580 and 1.0530 areas.
by Alex_Boltyan_FXAnalyst
EUR/USD Ends The Week Higher Above Critical Support The EUR/USD advanced slightly on Friday and closed the week higher as the U.S. dollar weakened across the board amid a better market mood, which saw Treasury yields receding from recent highs. At the time of writing, the EUR/USD pair is trading at the 1.0630 area, up 0.3% on the day and posting a modest 0.8% weekly gain. Data from S&P Global showed that the U.S. services PMI stood in expansion territory at 50.6 in February, slightly above expectations and the previous monthly reading, while the Global Composite PMI managed to hold above the 50 threshold at 50.1 but came below the expectations of 50.2. The ISM Services PMI also lived up to the market expectations as it came in at 55.1 in the same period, above the 54.5 of consensus. Across the pond, the German S&P Global Composite PMI came in at 50.7 in February below the 51.1 expected. However, the euro gained traction on the back of European Central Bank (ECB) Governing Council member Pierre Wunsch's comments, who stated that a terminal rate of 4% should not be discarded if core inflation does not ease. For the upcoming week, the focus will be on Federal Reserve Chair Jerome Powell's semiannual testimony before the U.S. Congress and the February jobs report on Friday. EURUSD Daily Chart From a technical perspective, the EUR/USD holds a slightly bearish bias on the daily chart, although the outlook remains positive on the weekly chart. Critical short-term resistance is seen at the 20-day Simple Moving Average (SMA) at the 1.0660 area, followed by the 1.0700 psychological mark. On the other hand, support levels could be found at 1.0578, which is the 38.2% retracement of the 1.2266-0.9535 decline, a former resistance turned into support. A loss of the latter would expose the 20-week SMA at 1.0515 and at the 1.0500 psychological level, which is being reinforced by the 100-day SMA.
by Alex_Boltyan_FXAnalyst
EUR/USD Loses Momentum And Trims Weekly Gains The EUR/USD pair came under pressure on Thursday, reversing most of the previous day’s gains, despite stronger-than-expected inflation data from the Eurozone. At the same time, the dollar benefited from rising U.S. bond yields amid mounting concerns about global inflationary pressures. At the time of writing, the EUR/USD pair is trading at 1.0603, 0.59% below its opening price, after being rejected from a daily high of 1.0672. Meanwhile, the dollar measured by DXY Index is trading just beneath the 105.00 mark, recording a 0.55% gain on the day. In the Old Continent, the inflation rate, measured by the preliminary Harmonized Index of Consumer Prices (HICP), increased to 8.5% over the year to February, above the 8.2% expected. The core inflation rate was 5.6% in the same period versus the 5.3% expected. Following the data release, the yield on the 10-year German Bund pulled back after setting fresh multi-annual highs and stands at 2.75%. Across the pond, U.S. Treasury yields are exhibiting strong performance, with the 10-year rate at 4.07%. The 2- and 5-year yields also advanced to 4.9% and 4.32%, respectively. Additionally, the European Central Bank (ECB) released the latest meeting minutes, which didn’t provide new information. The accounts showed that Governing Council members agreed more rate increases would be necessary. From a technical standpoint, the EUR/USD maintains the short-term bearish outlook according to indicators on the daily chart as the RSI and MACD are both declining, pointing to a possible downward continuation. At the same time, the pair’s advances remain capped by the 20-day SMA, which acts as solid dynamic resistance, currently at 1.0670. The immediate support level is seen at the weekly lows at 1.0525, followed by the 1.0500 psychological mark, reinforced by the 100-day SMA, and then the January low at 1.0483. On the other hand, the bulls need to break above the 20-day SMA to pave the way toward 1.0700 and potentially to the 1.0750 area.
by Alex_Boltyan_FXAnalyst
EUR/USD Advances Towards 1.0700 After German Inflation Data The EUR/USD pair was boosted on Wednesday and advanced to fresh weekly highs following the release of higher-than-expected German inflation data. The pair's advance has also been underpinned by the rise in the German 10-year Bund yield, which reached the highest level in 12 years at 2.724%. At the time of writing, the EUR/USD pair is trading at the 1.0670 zone, recording a 0.94% daily gain, having printed a one-week high of 1.0691. Data released on Wednesday showed that the German annual rate of inflation, measured by the Harmonised Index of Consumer Prices (HICP), rose to 9.3% in February from 9.2% in January, surpassing the market's consensus of 9%. The euro has strengthened amid expectations the European Central Bank (ECB) will continue tightening its monetary policy and raising interest rates longer than previously estimated. Recent inflation reports from Spain, France, and Germany support that case. Furthermore, Bank of France Governor Francois Villeroy de Galhau said on Wednesday it is desirable reaching the terminal rate by September at the latest. Investors are betting on a 50 bps hike by the ECB in March, while the terminal deposit facility rate is now forecasted at 4% from 3.5% previously (currently at 2.5%). EURUSD Daily Chart From a technical perspective, the EUR/USD maintains a slightly bearish short-term bias, although indicators on the daily chart are improving, hinting at a steeper upwards correction. The pair is facing immediate resistance at the 20-day SMA at around 1.0690, and if broken, could pave the way to the next bullish target at the 1.0760 zone. On the other hand, the loss of the weekly lows at 1.0535 would worsen the short-term setup risking a retest of the 1.0500 psychological level and the 100-day SMA at 1.0473.
by Alex_Boltyan_FXAnalyst
Gold Bounces From Two-Month Lows, But Gains LimitedGold prices increased on Tuesday, with the spot price XAU/USD gaining for a second consecutive day after the greenback weakened across the board following a series of economic releases in Europe and the United States. At the time of writing, the XAU/USD pair is trading at $1,829, 0.7% above its opening price, after hitting a two-month low of $1,805 earlier in the session. Meanwhile, the dollar, measured by the DXY index, stands nearly flat at the 104.70 zone. Earlier in the session, February's consumer inflation annual rate from Spain and France came above the consensus at 6.1% (5% expected) and 7.2% (7% expected), respectively. Following the release, the yield on the two-year German bond spiked to a new five-year high as speculation grew that the Eurozone's tightening cycle would continue for some time. The European Central Bank's (ECB) terminal rate is forecasted at 4%, and speculative interest is pricing in rate increases to continue until early 2024. Across the pond, U.S. bond yields edged higher and trimmed the previous day's decline, with the 10-year yield trading at 3.93%, limiting the gold's gains. The 2- and 5-year yields were also higher, at 4.80% and 4.18%, respectively. Adding to the greenback's weakness, U.S. housing data came in weaker-than-expected, while the Conference Board Consumer Confidence Index dropped for the second month in a row to 102.9, versus an increase to 108.5 expected. From a technical perspective, the XAU/USD pair holds a short-term negative bias according to indicators on the daily chart. The RSI has turned higher but remains in negative ground, while the MACD prints lower red bars, reflecting dwindling bearish strength. On the downside, the $1,805 low acts as immediate support, followed by the $1,800 area and the 100-day SMA at $1,790 as the following targets. On the flip side, the 20-day SMA stands as a short-term resistance level at around $1,853, ahead of the $1,870 level and the $1,900 psychological mark, which is being reinforced by the 61.8% Fibonacci retracement of the $2,070-$1,615 drop.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
EUR/USD Trims Previous Week’s LossesThe EUR/USD pair trades higher on Monday after five consecutive days of losses on the back of durable goods data coming in on the weak side in January. As recession fears increase, U.S. bond yields took a U-turn, weighing on the dollar. At the time of writing, the EUR/USD pair is trading at 1.0580, 0.34% above its opening price, after hitting a fresh multi-week low of 1.0532 earlier on Monday. Meanwhile, the U.S. dollar, measured by the DXY Index, trades at the 104.91 area, posting a 0.32% loss on the day. Data from the U.S. Census Bureau showed that Durable Goods Orders dropped by 4.5% in January, worse than the 4% decline expected, while the Nondefense Capital Goods Orders tumbled by 5.1%, surprising the market as the expectations were for a 0.1% increase. U.S. bond yields turned lower following the data release, with the 10-year note yielding 3.90%, while the 2 and 5-year bond rates are at 4.77% and 4.16%, respectively, all three of them shedding around 1% on the day. For the rest of the week, investors will eye S&P Global and ISM PMIs data for both the U.S. and the Eurozone, as well as inflation data for the latter and the U.S. nonfarm payrolls on Friday. From a technical perspective, the EUR/USD holds a short-term bearish bias according to indicators on the daily chart, although they are losing bearish momentum, likely pointing to an upwards corrective move. At the same time, the price consolidates between the 20- and 100-day moving averages. On the upside, the EUR/USD next resistance level could be found at 1.0600, followed by the 20-day SMA at the 1.0715 area. On the flip side, short-term supports are seen at the 1.0500 level, followed by the January lows at 1.0483 and then 100-day SMA, currently at around 1.0460.
by Alex_Boltyan_FXAnalyst
EUR/USD Drops to Seven-Week Lows After U.S. Inflation DataThe EUR/USD pair came under renewed pressure on Friday and fell to its lowest level in seven weeks as the dollar jumped, in tandem with U.S. Treasury bond yields, following another round of inflation figures. At the time of writing, the EUR/USD is trading at the 1.0550 zone, down 0.4% on the day and on track to post a 1.4% weekly decline. The pair scored its weakest level since January 6 at 1.0536 at the beginning of the New York session. Data from the U.S. showed that the annual core PCE inflation, the Federal Reserve’s preferred gauge of inflation, came in at 4.7% in January, hitting the highest rate in six months and surpassing the market consensus of 4.3%. The inflation data fueled expectations the Fed will maintain its hawkish stance, which saw the U.S. bond yields and the dollar soaring. The 10-year yield reached 3.97%, while the 2- and 5-year rates climbed to 4.82% and 4.23%, respectively. Following the higher-than-expected PCE inflation reading, investors are betting on probabilities of 70% of a 25 bps hike versus a 29.9% of a higher increase of 50 bps, which case is getting stronger. In that sense, next week’s nonfarm payrolls data (March 3) and February CPI figures (March 14) would influence expectations ahead of Fed’s meeting on March 21-22. From a technical perspective, the EUR/USD maintains a short-term bearish bias according to indicators on the daily chart as the RSI and MACD are both deep in negative ground. However, if the bulls manage to hold the 1.0480 level, the pair will retain its bullish longer-term outlook as indicators remain in positive territory on the weekly chart while the price hovers above the 100- and 200-day SMAs. On the downside, support levels are seen at February 24 low at 1.0536, followed by the 1.0500 area, and the January low of 1.0480. On the other hand, bounces will face immediate resistance at the 1.0600 area, followed by the 1.0650 level and the 20-day SMA around 1.0720.
by Alex_Boltyan_FXAnalyst
Gold Tests Critical Support Ahead Of U.S. PCE Inflation DataGold prices edged lower for the third day in a row on Thursday, with the spot XAU/USD touching its lowest year-to-date level below $1,830 despite the pullback seen in U.S. bond yields. At the time of writing, the XAU/USD pair is trading at $1,823 an ounce, 0.16% below its opening price, after hitting its weakest level since December 30 at $1,817.55 an ounce. A downward revision of U.S. economic growth in the fourth quarter triggered caution among traders, favoring the greenback in a choppy session. The Gross Domestic Product (GDP) growth was revised to 2.7% in the fourth quarter, down from the first estimate of 2.9%. On Friday, the U.S. will release the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred gauge of inflation, which is expected to show an annual rate of inflation of 4.3% in January, down from 4.4% in December, while the core PCE inflation rate is expected to ease to 4.9% from 5% the previous month. Meanwhile, investors continue to ponder the latest Federal Open Market Committee (FOMC) minutes, which showed several participants advocated for a 50 bps rate raise and noted that further evidence of a firm downward path in inflation is still needed. According to the WIRP tool, investors are betting on higher probabilities of 76% of a 25 bps hike by the Fed in March. From a technical viewpoint, the XAU/USD pair maintains a short-term bearish bias according to indicators on the daily chart, while the price continues to print lower lows below the 20-day simple moving average (SMA) but still holding above the 100- and 200-day SMAs. The immediate support area stands at the 2023 lows at around $1,817. Loss of this level would risk a steeper decline, targeting the $1,800 zone and then the 100-day SMA at $1,789. On the flip side, the immediate resistance level could be found at the weekly highs around $1,850, followed by 20-day SMA at $1,870 and the $1,900 mark.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
EUR/USD Drops To Six-Week Low Sub-1.0600 After FOMC Minutes The EUR/USD pair edged lower and posted a fresh monthly low under 1.0600 on Wednesday amid a stronger U.S. dollar favored by the risk-off environment. However, the corrective decline in U.S. yields across the curve limited the greenback advance and kept the EUR/USD within a narrow range. At the time of writing, the EUR/USD pair is trading at the 1.0605 area, down 0.36% on the day, having struck its lowest level since January 6 at 1.0598. The dollar remained firm after the release of the latest Federal Open Market Committee (FOMC) meeting minutes, which showed some members raised concerns about an economic recession in 2023. Still, members voted unanimously to raise the target range for federal funds by 25 bps despite the fact that some members advocated in favor of a 50 bps increase. Meanwhile, across the pond, European Central Bank (ECB) member François Villeroy de Galhau noted that the bank is not obliged to raise rates in every meeting, stressing that the monetary policy is already in the restrictive territory with a 2.5% rate. The final reading of the German Harmonized Index of Consumer Prices confirmed the annual inflation rate at 9.2%. The Eurozone will publish the figures for the bloc on Thursday, which are expected to show consumer inflation hitting 8.6% in January. The U.S. will release the Q4 Gross Domestic Product (GDP) second estimate. From a technical perspective, the EUR/USD retains a short-term bearish bias according to indicators on the daily chart, while the price is printing the third red candle in a row. Still, the RSI has not reached oversold territory yet, leaving room for a steeper decline. The 1.0580 area stands as the immediate support level, followed by 2023 low at 1.0481 and then the 100-day simple moving average (SMA) at 1.0440. On the flip side, short-term resistances are seen at this week’s high at around 1.0700 and the 20-day SMA at 1.0745 ahead of the February 14 peak of 1.0804.
by Alex_Boltyan_FXAnalyst
EUR/USD Fails To Sustain Gains And Slides Below 1.0700The EUR/USD pair treads water on Thursday as the dollar shrugged off mild intraday weakness following the release of U.S. producer price index (PPI) data. At the time of writing, the EUR/USD pair is trading at the 1.0685-90 area, virtually unchanged on the day, after retreating from a daily high of 1.0723. U.S. producer price index inflation slowed slightly, still coming higher than expected in January, with the PPI annual inflation rate printing 6%, versus 6.5% the previous month and 5.4% forecasted. The core rate, which excludes volatile items such as food and energy, came in at 5.4% versus 5.5% the previous month but above the 4.9% expected. Separated data showed initial jobless claims edged down to 194,000 in the week ending February 10 from 195,000 the previous week and below the 200,000 of consensus. Market participants continue to look at developments from both the European Central Bank (ECB) and the Federal Reserve when it comes to the potential next steps in monetary policies, as the key drivers for the price action. From a technical perspective, the EUR/USD pair maintains a short-term bearish bias according to indicators on the daily chart, while the price hovers below a descending 20-day simple moving average (SMA) but above the 100- and 200-day SMAs. If the pair loses the 1.0650 zone, it could extend its decline toward the next support area at around 1.0580. On the flip side, the next resistance levels are seen at February 15 high at 1.0745 and the 20-day SMA at 1.0810.
by Alex_Boltyan_FXAnalyst
Gold Advances For A Third Day As Markets Ponder Powell's StanceGold prices are up for a third day in a row on Wednesday, amid a weaker U.S. dollar following words from Federal Reserve Chairman Jerome Powell on Tuesday. The yellow metal is trimming post-nonfarm payrolls data losses. At the time of writing, spot gold price XAU/USD is trading at the $1,880 area, recording a 0.46% gain on the day. In an interview, Powell said that the central bank needs to increase rates further as it has not yet reached a sufficiently restrictive stance. Powell noted that the disinflationary process “has a long way to go” and still the mere mention of the word “disinflation” acted as a catalyst to deem the central banker not-so-hawkish, weighing on the U.S. yields and the dollar and lifting equity prices. He also stated that future hikes would remain data dependent. By the end of the interview, however, the greenback had stabilized and the U.S. yields were from flat to higher. In terms of rates, the WIRP tool suggests a 25 bp hike in March by the Fed is fully priced in with very low odds of a larger 50 bp increase. The metal price action will continue to follow yields and dollar dynamics, with several FOMC members speaking on Wednesday. From a technical perspective, the XAU/USD short-term bias remains tilted to the downside following last week’s slump, although the RSI has turned higher and approached its midline, while the MACD prints lower red bars. A break above the $1,895-$1,900 zone, would improve the technical outlook, targeting a now flat 20-day SMA at the $1,915 zone. On the flip side, the immediate support area is seen at weekly lows at $1,860, followed by $1,840.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
EUR/USD Erases Weekly Gains After Impressive NFP ReportThe U.S. dollar bounced sharply on Friday, reversing weekly losses against the euro as a stunning nonfarm payrolls report boosted expectations the Fed would stick to its hawkish stance. U.S. yields, and the greenback, jumped after the Bureau of Labor Statistics reported the U.S. economy added 517,000 jobs in January, beating by far the market consensus of 185,000, almost doubling December’s 260,000 gain. Other details of the nonfarm payrolls report showed the unemployment rate edged down to 3.4% from 3.5% the previous month, while annual wage inflation, as measured by the Average Hourly Earnings, eased to 4.4% in January. At the time of writing, the EUR/USD is trading at the 1.0810, 0.9% below its opening price, extending its pullback from the post-Fed 1.1032 high. The pair is also poised to post a weekly loss of 0.5%. Following the solid job figures, U.S. Treasury yields soared across the curve, propelling the dollar’s rally. The 2, 5 and 10-year bond rates rose around 4% each, to 4.27%, 3.64% and 3.51%, respectively. In addition, markets are fully pricing in a 25 bps hike in March, while at the beginning of the session, there were some bets of the Fed not hiking. Earlier in the session, S&P Global data from the Eurozone showed that January Global Composite PMI rose to 50.3 versus the 50.2 expected, while the Services PMI jumped to 50.8, also beating the consensus of 50.7. From a technical standpoint, the EUR/USD maintains a positive outlook on the weekly chart. However, the shorter-term perspective has deteriorated after last sessions’ pullback. The price has slid below the 20-day SMA but holds above the 100- and the 200-day SMAs, which are about to complete a bullish crossover. Furthermore, indicators show increasing bearish interest as the RSI plummeted near its midline while the MACD prints higher red bars. A close below the 20-day SMA could add some pressure over the pair, exposing following support areas at 1.0800 and 1.0770. On the other hand, the next resistance levels line up at 1.0900, followed by 1.1035 and 1.1085.
by Alex_Boltyan_FXAnalyst
1
EUR/USD Trims Fed-inspired Gains After ECB DecisionThe EUR/USD pair erased a significant part of Wednesday’s Fed-induced rally as European Central Bank’s (ECB) President Christine Lagarde delivered a cautious press conference, which weighed on the euro. At the time of writing, the EUR/USD trades at the 1.0915 area, posting a 0.65% daily loss, after printing its highest level in nine months at 1.1085. At the same time, the U.S. dollar managed to stage a noticeable rebound as its DXY index gains 0.5%, around 101.70. The ECB decided to raise its main interest rates by 50 bps, being the highest level since November 2008 for the deposit facility rate, which now stands at 2.5%. The monetary policy statement confirmed another 50 bp hike in March, but during the press conference, Lagarde only committed to a “strong intent” and limited the hawkish tone. A dovish tilt was also perceived as the inflation risk was described as more balanced, with the consumer inflation coming down from cycle highs while economic activity is doing better than expected. On the other hand, the dollar recovered across the board on Thursday, trimming post-Fed losses. At the same time, markets continued to cheer Jerome Powell’s confirmation that the disinflationary process has begun as U.S. bond yields continued to fall, although they ended the day away from lows, while the Wall Street indexes extended gains except for the Dow Jones that closed nearly flat. On Friday, the nonfarm payrolls report will be release, with expectations pointing to a 185,000 job increase in January. From a technical standpoint, the EUR/USD maintains the short-term bullish bias, with the price hovering near multi-month highs and above its main moving averages, while indicators remain in positive territory despite losing some bullish momentum. On the upside, the following resistance levels are seen at 1.1035 and the 1.1085 high, followed by the 1.1100 psychological area. On the flip side, support levels could be found at 1.0880, and the 20-day simple moving average at 1.0832.
by Alex_Boltyan_FXAnalyst
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EUR/USD soars as U.S. yields, Dollar plummet after Fed decision The EUR/USD pair jumped to a fresh 10-month high at 1.1000 after the Federal Reserve decided to raise the target range for the federal funds rate by 25 basis points to 4.5%-4.75% as expected. At a press conference, Fed’s Chair Jerome Powell stated that for the first time, the Fed can say that the disinflationary process has begun, but that “is not grounds for complacency.” Furthermore, Powell noted that additional rate hikes will be appropriate and reiterated that the Fed is fully committed to bringing inflation back down to the 2% long-term target. Regarding the latest inflation data, he welcomed the decelerating readings but added that the FOMC members need more evidence. He focused on the risk of inflation expectations becoming unanchored, stating that it will threaten price stability and that it is still too early to declare victory. Even so, the message was read as dovish by market participants, which triggered a slump in U.S. Treasury bond yields and, therefore, a sell-off in the Dollar. At the time of writing, the EUR/USD trades at the 1.0990 area, recording a 1.2% daily gain after peaking at its highest level since April at 1.1001. Across the pond, the Eurozone released lower-than-expected Harmonized Index of Consumer Prices data. The headline index grew 8.5% year-over-year in January, lower than the 9% expected, and down from the 9.2% rate in December. The core inflation was reported at 5.2%, unchanged from the previous month and slightly above expectations of 5.1%. Investors’ attention shifts to Thursday’s European Central Bank (ECB) monetary policy decision. The European bank is expected to hike the main rates by 50 basis points. In the aftermath, the EUR/USD pair holds a bullish bias as indicators on the daily chart gained momentum with the Fed-induced rally. On the upside, immediate resistance levels are seen at 1.1000 and 1.1050, while support levels could be found at 1.0900, 1.0860 and the 20-day SMA at around 1.0813.
by Alex_Boltyan_FXAnalyst
EUR/USD Tests 1.0800 As Fed, ECB Take Center StageThe EUR/USD pair trades slightly lower for a fourth consecutive day on Tuesday despite growth data from the Eurozone coming better than expected as market sentiment remains cautious ahead of the central banks' meetings this week. At the time of writing, the EUR/USD pair is trading at the 1.0835 level, 0.12% below its opening price, having bounced from a two-week low of 1.0802 earlier on the day. Meanwhile, the dollar, measured by the DXY index, continues to outperform its rivals, recording a four-day winning streak at the 102.40 zone. The Eurozone economy grew by 0.1% in the last quarter of 2022, slightly above the expectations of stagnation and decelerating from the previous reading of 0.3% in Q3, according to Gross Domestic Product (GDP) figures released by Eurostat in a preliminary on Tuesday. On a yearly basis, the block's GDP increased by 1.9% in the fourth quarter, compared to the 2.3% growth in Q3, surpassing the 1.8% expected growth rate. In addition, the Federal Statistics Office of Germany released December Retail Sales data, which showed an annual decrease of 6.4% versus the 4.3% fall expected. Investors' attention remains on the Federal Reserve decision (Wednesday) and the European Central Bank (ECB) announcement on monetary policy (Thursday). While the former is expected to hike by 25 bps, the latter is seen raising the main rates by 50 bps. Against this backdrop, the dollar is benefiting from the jitters ahead of the meetings. From a technical standpoint, the EUR/USD maintains a bullish short-term bias despite the current pullback, which for now, is seen as merely corrective. Indicators on the daily chart show that sellers remain in positive territory, although they have turned mostly flat, while the price hovers just above the 20-day Simple Moving Average (SMA). The immediate support levels are seen at the 1.0800-1.0790 zone, where the 20-day SMA reinforces the psychological level, followed by the mid-January lows at the 1.0720 region. On the other hand, the next resistance level stands at the nine-month peak of 1.0929, followed by the 1.1000 psychological area.
by Alex_Boltyan_FXAnalyst
EUR/USD Edges Lower As Investors Brace For Central Banks The EUR/USD pair ended Monday slightly lower after opening the week on a solid note and briefly rising above the 1.0900 level. Most crosses in the FX market remain trading within narrow ranges as investors take the sidelines ahead of top-tier events this week, including Federal Reserve and European Central Bank (ECB) meetings and the U.S. nonfarm payrolls report. At the time of writing, the EUR/USD pair is trading at the 1.0850 area, 0.17% below its opening price, having retreated from a daily high of 1.0913. Data released on Monday showed that the German economy grew at an annualized pace of 1.1% in the last quarter of 2022, missing expectations of 1.3%. At the same time, inflation came in higher than expected in Spain, with the Harmonized Consumer Price Index growing by 5.8% in the 12 months to January, according to the preliminary reading, above the 4.8% expected and above the 4.7% December rate. This is the first increase in the Spanish inflation rate since July. Price pressures continue to fuel expectations that the ECB will proceed with a 50 bp rate hike on Thursday, as widely expected. From a technical perspective, the EUR/USD holds a positive short-term bias according to the daily chart, despite signs of losing momentum over the last several sessions. The pair is still trading close to multi-month highs and above its main moving averages, with pullbacks being viewed as corrective. On the upside, the following resistance levels are seen at the nine-month peak high of 1.0929, followed by the 1.1000 psychological area. On the other hand, the immediate support level stands at 1.0839, Monday’s low, followed by the 1.0800 mark and the 20-day SMA at 1.0780.
by Alex_Boltyan_FXAnalyst
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U.S. Dollar Index Maintains Bearish Bias Ahead of Key EventsThe U.S. dollar, measured by the DXY index that tracks the value of the American currency against a basket of peers, closed the week virtually unchanged despite Friday's gains. At the time of writing, the DXY index trades at 101.98, 0.16% above its opening price, having retreated from a daily high of 102.19 following the release of Personal Consumption Expenditure (PCE) price index data. The U.S. Bureau of Economic Analysis reported that the rate of inflation, as measured by the Personal Consumption Expenditures Price Index, decreased to 5% on an annual basis in December, compared to 5.5% in November. Additionally, the Core PCE Price Index, the Fed's preferred inflation gauge, dropped to 4.4% from 4.7% the previous month, meeting market expectations. On a monthly basis, both the Core PCE and PCE price indexes increased by 0.3% and 0.1%, respectively. Other data suggested that the five-year University of Michigan inflation expectations declined to 2.9% while the Consumer Confidence index came in better than expected at 64.9. As inflation has been on a steady decline, markets are anticipating less aggressive moves by the Federal Reserve, with two more 25-basis point interest rate hikes foreseen before the current tightening cycle comes to an end. Market price dynamics for the short term will be determined by Jerome Powell's forward guidance and the investor's assessments of when the Fed will pivot to rate cuts. On Wednesday, the Fed will pronounce its verdict, while next Friday, the U.S. will release the nonfarm payrolls report. The European Central Bank and the Bank of England will also announce their decisions. From a technical standpoint, the DXY index still holds a bearish bias according to the weekly and daily charts. Weekly indicators remain deep in negative territory while the price is printing a Doji candle following two consecutive weekly declines, reflecting investors' indecision ahead of key macroeconomic events. On the upside, the next resistance levels align at 102.20, followed by the 20-day SMA at 102.80, and the area at the 103.00 psychological mark. On the other hand, the immediate support level can be seen at the cycle low of 101.56, followed by the 101.00 and 100.50 areas.
TVC:DXY
by Alex_Boltyan_FXAnalyst
EUR/USD Corrects Lower As Investors Assess Macroeconomic DataThe EUR/USD pair slipped back below the 1.0900 level during American trading hours on Thursday following the release of upbeat U.S. macroeconomic data. While investors continue to assess the economic figures, U.S. yields advanced, and Wall Street indexes fell in the data aftermath, favoring the greenback. At the time of writing, the EUR/USD pair trades at the 1.0885 area, 0.25% below its opening price. The U.S. Gross Domestic Product (GDP) grew at an annualized rate of 2.9% in the last quarter of 2022, surpassing the market consensus of 2.6% but slowing in comparison with the 3.2% rate of the previous quarter. The Core Personal Consumption Expenditures price index slowed down to 3.9% in the fourth quarter from 4.7% in the third quarter. Separated data showed durable goods orders increased significantly by 5.6% in December due to a large number of new contracts for Boeing passenger airplanes. On Friday, the U.S. will publish monthly and annual figures of the Core Personal Consumption Expenditure (PCE) Price Index, which may play a significant role in next week's Federal Reserve interest rate decision. Currently, markets continue to price in a higher likelihood of a 25 bps interest rate increase and only near 5% probability of a higher increase of 50 bps. From a technical standpoint, the EUR/USD maintains a positive outlook in the short term, as shown on the daily chart, despite indicators losing momentum over the last sessions. Meanwhile, the pair continues to trade above its main moving averages and near multi-month highs, with pullbacks seen as corrective. The EUR/USD pair needs a decisive break above the 1.0925-35 area to open the door to more gains, targeting the 1.1000 psychological level. On the flip side, a loss of the 1.0835 zone would expose 1.0800 and the 20-day SMA at 1.0760.
by Alex_Boltyan_FXAnalyst
EUR/USD Takes A Breather Amid Cautious Mood Ahead of Key Events The EUR/USD pair advanced slightly on Wednesday, recovering the 1.0900 level as markets continue to oscillate ahead of crucial economic data and the Federal Reserve’s decision next week. The euro found some support in German IFO data, which indicated a slight improvement in business sentiment in January. At the time of writing, the EUR/USD pair is trading at the 1.0910 area, 0.27% above its opening price, pretty close to its nine-month high of 1.0926 struck earlier this week. On the data front, the German IFO business climate index came in at 90.2 in January versus 88.6 in December, matching the market consensus. The expectations index rose to 86.4, above the 85 expected, while the current evaluation figure came in at 94.1 versus 95 expected. Market participants are taking a more cautious approach as they await U.S. fourth-quarter Gross Domestic Product numbers on Thursday and the Personal Consumption Expenditures (PCE) Price Index. In addition, ahead of Fed’s verdict next week, markets continue to price in lower rate hikes, with a 25 bps move widely expected. Wall Street indexes are trading in the red, while U.S. Treasury yields continued to decline on Wednesday, reflecting the cautious mood. Still, the greenback has been unable to profit from it. From a technical standpoint, the EUR/USD pair holds a short-term bullish bias according to indicators on the daily chart, although the RSI and the MACD have lost some momentum as the price consolidates below the 1.0926 high. A break above the latter could pave the way to steeper gains, with the 1.0935 standing as the immediate resistance zone, followed by the 1.1000 psychological mark. On the other hand, the loss of this week’s lows at 1.0835 would expose the next support levels at the 1.0800 area and the 20-day SMA at around 1.0750.
by Alex_Boltyan_FXAnalyst
Gold Maintains Bullish Bias, Eyes 2022 Highs Gold prices extended gains into a second session on Tuesday as bets for a smaller rate hike by the Federal Reserve next week continue to weigh on the U.S. dollar. At the same time, a slight pullback in U.S. Treasury yields has also helped the yellow metal. At the time of writing, the spot price XAU/USD is trading at $1,936 an ounce, 0.3% above its opening price, after posting its highest level since April at $1,942. Expectations of smaller rate hikes by the Fed have been adding pressure on the dollar over the last months. The WIRP tool suggests a 25 bps rate hike is fully priced in for the February 1 decision, with less than 5% odds of a larger 50 bps increase. There will be no more Fed speakers heading into the monetary policy meeting as the central bank has entered the blackout period. Since expectations of a Fed pivot started back in September, the gold price has risen more than $300 an ounce, from a low of $1,615 to $1,935 currently, which is nearly 20% in four months. XAU/USD is now close to the 2022 peak of $2,070. The technical picture remains bullish for the yellow metal, according to indicators on the daily chart, while the price continues to make higher highs above its main moving averages. The last major barrier ahead of mentioned 2022 highs is seen at $1,973, which is the 78.6% Fibonacci retracement of last year’s decline. Still, the RSI stands in overbought territory suggesting the XAU/USD may need a phase of consolidation and some profit-taking before another rally. On the downside, immediate support could be found at $1,900, followed by the 20-day SMA at $1,877 and then the $1,840 zone.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
EUR/USD Fails To Hold Above 1.0900 Despite Hawkish ECB CommentsThe EUR/USD pair is trading virtually unchanged on Monday after being rejected from a fresh nine-month high above 1.0900 amid profit-taking flows. At the time of writing, the EUR/USD pair is trading at the 1.0865 area, back at square one, having retreated from its highest intraday level since April at 1.0926. Monetary policy divergences that helped the dollar throughout 2022 are now weighing on the American currency as investors continue to price in a less aggressive Fed. According to the WIRP tool, markets foresee three consecutive 25-bps hikes in 2023. On the other hand, hawkish comments from European Central Bank (ECB) officials keep the shared currency underpinned. ECB's Olli Rehn stated that the bank should raise interest rates significantly over the next months. At the meantime, his colleague Klass Knot said that the bank will raise rates by 0.5% in February and March, and that market should expect more steps to follow in May and June. Markets are pricing a 50 bps hike by the ECB at the February meeting, followed by another 50 bps increase in March. Then, a 25 bps hike in May is being priced in followed by another one in the third quarter. For the rest of the week and ahead of Fed's verdict on February 1, PCE deflator and PMIs data from the U.S. will be closely looked upon by the markets. From a technical perspective, the EUR/USD short-term bias remains bullish as the pair continues to trade above its main moving averages while indicators stand in positive territory. However, the RSI hovers near overbought conditions, which could give way to a phase of consolidation before another leg higher. Short-term barriers on the upside are seen at Monday's high at 1.0926, followed by the 1.0935 area and the psychological 1.1000 level. On the other hand, the 1.0800 area, the 20-day SMA, located close to 1.0723, and the 1.0700 zone line up as short-term supports.
by Alex_Boltyan_FXAnalyst