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XAU/USD Current price: $2,020.86 Stock markets welcomed robust earnings reports, posted gains in all sessions. United States macroeconomic data indicated resilience, US Dollar trimmed early losses. XAU/USD seem to have pared the near-term bleeding, but the risk remains skewed to the downside. Spot Gold eased from a fresh multi-week high of $2,034.86. The US Dollar edged sharply lower during Asian trading hours and remained on the back foot through most of the European session but turned higher ahead of Wall Street’s opening. The early slide can be attributed to a rally in tech stocks, pushing Asian and European indexes sharply higher.   United States (US) indexes rallied ahead of the opening, but that did not prevent the USD from recovering ground following the release of US data. The country reported that Initial Jobless Claims increased by less than anticipated in the week ended February 16, up 201K vs the 218K expected. Additionally, S&P Global published the flash estimate of the February Producer Manager Indexes (PMIs), showing 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… Read More »Gold Price Forecast: XAU/USD challenging the $2,020 mark

EUR/USD Current price: 1.0850 The EU Hamburg Commercial Bank flash PMIs indicated contraction decelerated but remains. Stock markets surged amid solid earning reports boosting the tech sector. EUR/USD retains its near-term positive momentum after peaking at 1.0888. The EUR/USD pair jumped to 1.0888 on Thursday as the US Dollar turned south following a solid performance in Asian equities, indicating an improved market mood. Stock markets rallied after NVIDIA unveiled its earning report, with higher-than-anticipated sales estimates, boosting the tech sector and risk appetite. EUR/USD rally cooled down following the release of tepid European data. The Hamburg Commercial Bank (HCOB) released the February flash Producer Manager Indexes (PMIs), indicating a deceleration in the rate of contraction across the bloc’s business activity. The Eurozone witnessed the slowest pace of decline in eight months, with the provisional PMI survey data revealing stabilization in the services sector, which helped somewhat to counterbalance the continued sharp downturn in manufacturing output. The HCOB Flash Eurozone Composite PMI rose modestly from 47.9 in January to 48.9. Despite signaling a ninth consecutive month of contracting output, the latest reading points to a moderation in the extent of the economic downturn, excluding the initial months of the pandemic, since… Read More »EUR/USD Forecast: Buyers aim to push it beyond 1.0900

Recently an agreement has been reached between representatives of the European Council, the European Parliament, and the European Commission on a new economic governance framework. It focuses on risk-based surveillance, differentiation between member states based on their specific situation, the integration of fiscal, reform and investment objectives in a medium-term fiscal plan. The single operational indicator in the form of a net expenditure path should facilitate communication and emphasizes the key role of discretionary primary spending rather than tax increases in bringing public finances under control. The reference trajectory, in combination with the debt safeguard and the deficit resilience safeguard, implies that many EU countries will have to undertake a sustained adjustment effort lasting several years. With the Treaty of Maastricht of 1992, an EU economic governance framework was established to coordinate economic policies to achieve the EU’s economic objectives1. The latter concern the soundness and sustainability of public finances, sustainable economic growth and convergence, addressing macroeconomic imbalances as well as reforms and investments to enhance growth and resilience. A key component of the framework is the Stability and Growth Pact (SGP) -adopted in 1997- and its rules for the monitoring and coordination of national fiscal and economic policies.2 Its… Read More »Addressing the public debt challenge in the EU: The role of the new economic governance

EUR/USD gathered bullish momentum and advanced to the 1.0850 area. Improving risk mood weighs on the US Dollar on Thursday. Markets await Manufacturing and Services PMIs for the Euro area, Germany and the US. EUR/USD extended its recent uptrend after closing in positive territory on Wednesday and touched its highest level since early February above 1.0850 on Thursday. The pair’s technical outlook points to a buildup of bullish momentum ahead of PMI data releases. The broad-based selling pressure surrounding the US Dollar (USD) fueled the pair’s rally in the second half of the week. Although the USD managed to hold resilient against its rivals after FOMC Minutes, improving risk mood made it difficult for the currency to find demand during the Asian trading hours. The Federal Reserve (Fed) said in the minutes of the January policy meeting 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. Upbeat earnings figures from Nvidia triggered a rally in technology stocks after the closing bell. At the time of press, S&P futures and Nasdaq futures were up 0.85% and 1.6%, respectively,… Read More »EUR/USD Forecast: Euro could push higher while 1.0840 support holds

Gold price regains upside traction on Thursday after a muted close on Wednesday. US Dollar and US Treasury bond yields stay defensive amid hawkish Fed Minutes and upbeat mood. Gold price awaits a firm break above $2,035, as a falling wedge breakout remains in play. Gold price has resumed its bullish momentum near $2,030 early Thursday, having paused its recovery rally on Wednesday. A risk-on market environment is acting as a headwind for the US Dollar, despite the hawkish US Federal Reserve (Fed) January meeting Minutes. Gold price eyes PMI data  Asian markets are trending higher, with Chinese stocks supported by the latest policy support measures and the latest ban on major institutional investors from selling equities at the open and close. The sentiment also remains underpinned by the American tech-giant Nvidia’s encouraging earnings result, posted after the Wall Street closing bell on Wednesday. Nvidia posted $5.16 earnings per share (EPS) vs. $4.64 expected while revenue stood at $22.10 billion vs. $20.62 billion expected. The AI pioneer said that it expected $24.0 billion in sales in the current quarter.  Against a better market mood, as reflected by a 0.74% gain in the US S&P 500 futures, the US Dollar is keeping… Read More »Gold Price Forecast: XAU/USD eyes a fresh uptrend on a sustained move above $2,035

AUD/USD reversed its march north on Wednesday. The next target emerges at the 200-day SMA near 0.6560. The Australian Wage Price Index surprised to the upside. The Australian dollar halted its upward trajectory, coming under selling pressure after retesting the 0.6570 zone against the US Dollar (USD) on Wednesday. Wednesday’s bearish price action came after five consecutive daily upticks in AUD/USD following yearly lows observed in the 0.6440 range earlier in the month. The pair’s decline was underpinned by a tepid bounce in the Greenback, leading the USD Index (DXY) to remain close to the 104.00 neighbourhood. The daily knee-jerk in spot coincided with a directionless performance for the US Dollar, as investors continued to assess the likelihood of the Federal Reserve (Fed) initiating a cycle of monetary easing later than anticipated. This sentiment gained momentum following resilient US inflation data tracked by the CPI and PPI for the month of January. On the domestic docket, Australia’s Wage Price Index rose more than estimated by 4.2% YoY in Q4, further propping up the decision by the Reserve Bank of Australia (RBA) to not rule out further tightening in the next few months. Still around the RBA, the central bank published… Read More »AUD/USD Forecast: Downside pressure mitigated above 0.6560

XAU/USD Current price: $2,023.03 Market players await FOMC Meeting Minutes for fresh directional clues. US indexes trade in the red ahead of Federal Reserve’s news. XAU/USD pressures recent lows amid resurgent US Dollar demand. The US Dollar gathered intraday momentum with Wall Street’s opening and ahead of the release of the Federal Open Market Committee (FOMC) Minutes. The Greenback trades mixed against its major rivals, marginally benefiting from a dismal mood. Asian and European equities struggled to post gains earlier in the day, while US indexes maintain the negative tone seen on Tuesday and trade in the red for a second consecutive day, reflecting the absence of risk appetite. The FOMC Minutes should provide additional clues on the Federal Reserve (Fed) decision to keep rates unchanged in the first meeting of 2024, while Chairman Jerome Powell stated that a March rate cut was quite unlikely. Ever since the meeting, the country released employment and inflation-related data that support the Fed’s wait-and-see case. As a result, speculative interest moved its rate-cut expectations to June, dropping bets for a May movement. The document, then, seems to have become old news and has few chances of affecting currencies. XAU/USD short-term technical outlook The daily… Read More »Gold Price Forecast: XAU/USD aims lower ahead of FOMC Minutes

EUR/USD Current price: 1.0797 Financial markets battle to retain the optimism amid Chinese woes. The Federal Open Market Committee (FOMC) will publish the Minutes of its latest meeting. EUR/USD continues to consolidate with modest signs of easing buying interest. The EUR/USD pair seesaws around the 1.0800 level, lacking directional strength on Wednesday as investors keep waiting for fresh clues. Financial markets are slowly digesting that global economic progress remains tepid and that central banks are nowhere near trimming interest rates after pushing them to record highs to control skyrocketing inflation. Indeed, price pressures have receded, and there are modest signs of growth. Still, the general picture is much weaker than speculative interest expected a year ago. The disappointment was partially offset by mostly encouraging earnings reports in the United States (US), which pushed the S&P500 to all-time highs. But as the season approaches its end, the focus shifts. Bad news from China keeps weighing on the market’s mood. The People’s Bank of China (PBoC) has trimmed mortgage-related rates this week to boost the troubled housing sector, to no avail. However, local stocks rallied early on Wednesday as authorities limited quant funds trading, yet another measure to support the market. Still,… Read More »EUR/USD Forecast: Stuck around 1.0800 ahead of FOMC meeting Minutes

EUR/USD stabilized above 1.0800 after closing in positive territory on Tuesday. The pair could face next resistance at 1.0840. Fed will release the minutes of the January policy meeting later in the day. EUR/USD gained traction and climbed to its highest level since early February at 1.0840 on Tuesday. Although the pair edged lower afterward, it managed to stabilize above 1.0800. The near-term technical outlook points to a bullish tilt. As trading conditions normalized following a three-day weekend in the US, the US Dollar (USD) came under bearish pressure amid retreating US Treasury bond yields during the American trading hours on Tuesday. Early Wednesday, the cautious market mood, as reflected by falling US stock index futures, helps the USD hold its ground and limits EUR/USD’s upside.  Later in the day, the Federal Reserve (Fed) will release the minutes of the January policy meeting.  According to CME FedWatch Tool, markets are currently pricing in a nearly 70% probability that the Fed will leave the policy rate unchanged in the next two policy meetings. Since the January policy meeting took place before the January labor market and inflation data releases, which caused investors to doubt a rate cut in May, the publication… Read More »EUR/USD Forecast: Euro resilience above 1.0800 is an encouraging sign for bulls

In focus today Today, we receive euro area consumer confidence figures for February. Consumer confidence is still at a low level which is likely the reason for the sluggish consumption ratio. Consumer confidence rebounded strongly during the first half of 2023 but has since stagnated. An increase in consumer confidence could be the trigger for higher private consumption in 2024 as real incomes improve. Tonight, minutes from the FOMC’s January meeting will be released. Markets will keep a close eye on any clues regarding the timing of the first rate cut, which we now expect to come in May. In addition, the Fed’s Bostic and Bowman will be on the wires ahead of the release. Overnight, Japanese PMI figures kick off the slew of PMI data that is due tomorrow. Economic and market news What happened overnight Japanese export volumes declined 4.6% in January indicating a slow start to the year following the technical recession in 2023H2. That said, January PMIs were more uplifting but have not been a good GDP indicator recently. What happened yesterday Yesterday we got Q4 GDP figures for Denmark, which showed an impressive rebound with a growth rate of 2.0% q/q. Furthermore, Q3 growth was… Read More »Will the FOMC Minutes give clues on the timing of rate cuts?